00:10well this is great but it before but as
00:16mellon was saying i last two talks that
00:19i gave were doing the life of IFI this
00:22talk will be about everything that I
00:25learned in the last 11 plus years of
00:28studying I fight so quick favor if you
00:32guys were okay with it
00:33please don't tweet and don't do social
00:36media because we had the exit less than
00:39a year ago so there are some rules
00:40around talking about exits by the SEC
00:43and all this stuff so just keep
00:45everything you know among us and ask me
00:48questions I it's being videotaped so
00:51that's okay just don't tweet in
00:54that'd be awesome thank you so how we
00:57start this is a photo of about ten years
01:01ago I was as tall but I was probably
01:05those are my three other co-founders
01:08that was our first meeting at Sand Hill
01:11so were four friends and you've I was
01:17one of my first friends is actually in
01:18the US since I was 13 years old I met
01:22Barron in any regime through Val about
01:25twenty years ago I've been in the u.s.
01:28says 85 I'm Israeli mega var would we
01:31were in eighth grade in the East Coast
01:34and we started I wanted to make cameras
01:39more fun to use and easier to share
01:42photos this is before you know the
01:45iPhone so remember around 2006 digital
01:49imaging was going at a massive rate up
01:53cameras became digital it was totally
01:56but getting images under the camera was
01:58a massive pain you took it the card out
02:01of the camera to put in put an 80
02:02computer upload download sort it took
02:06energy not rocket science you guys are
02:09all technical so it's easy for you to do
02:10but for the mom and the dad that have
02:14kids that are busy it takes energy to
02:17actually stop you know what you're doing
02:19and do it sure doing dishes is it sure
02:24a lot of a camera is also a chore so
02:28well we came up with actually during
02:31that meeting was the time to actually
02:33switched around our idea we actually
02:35came up with a USB stick a USB stick was
02:38going to suck out the images out of the
02:41camera and we want to model the photo
02:43industry so you go to a Costco Walgreens
02:46CVS it used to be that you dump your
02:48film in the canister in the you know big
02:52film dump and then you get photos after
02:56half an hour and that's how you used to
02:59be so actually it was very simple just
03:01took pictures you went to CVS or
03:03the little clerk would puff some air
03:06into the camera give you a new roll film
03:09and I was an entire market and in fact
03:11flip had you know a camera that was
03:14called a flip cam before they actually
03:16had the Flip camcorder there was around
03:18going into CVS getting the digital
03:21camera you know replaced with new flash
03:25and you got photos out of it but cameras
03:27became really cool and they became
03:30really really easy to use but the part
03:34that happened after the click see the
03:35click is very easy the part that happens
03:37after the click is very hard so we came
03:40up with a USB stick but the VCS and Sand
03:44Hill Road said hey you guys are for
03:46geeks you are clueless about retail you
03:50have no idea how to do how to approach
03:53Best Buy Walmart Target and you're
03:54basing your entire future on this memory
03:57stick that would be dumped into the film
03:58canister they would give the customers
04:01photos are out of the camera
04:04we had IP around having that USB stick
04:08protected you would stick to the camera
04:10it would only accept the cameras images
04:14and videos out you couldn't actually see
04:16in anything in it same way as film was
04:18and when you put the stake back into the
04:22retailer's bin they will give you photos
04:24back and they would re unlock the stick
04:28so you have patents on this but the VCS
04:31said you guys are smoking crack nobody
04:34would actually do this because there's
04:36no reason to actually
04:38believe that you four could do this so
04:41idea number two was a memory card the
04:45memory card was gonna basically be a
04:48smart memory card so instead of taking
04:50photos and having them stored on a
04:52memory card that goes into your shoe box
04:55as a roach motel the card would do
04:58everything for you in the background so
05:01you focus on taking pictures have fun do
05:04other magic with the camera and the
05:06eye-fi card does everything for you so
05:08that's what that's what we came up with
05:10that drawing the you see on the left is
05:15the first schematic drawing that my
05:18co-founder did overnight my co-founders
05:22are such amazing rockstars of
05:24Engineering they're the reason that I
05:25left engineering and became a business
05:28development guy in marketing and sales
05:29because they're just so good at no
05:31reason for me through you know you know
05:33I'm even attempt so the the schematic
05:36was the first thing that we did to prove
05:38we country cram a radio a transceiver
05:41flash a CPU a crystal all onto the card
05:46so we did that overnight the middle card
05:51do you see is the world's most expensive
05:54memory card that was about four grand to
05:56make because the mold for the plastic
05:59was about four grand but that's that
06:01happened after three months we built out
06:04the card we proved that we weren't
06:09smoking crack we could do everything on
06:11our own Behrend wrote firmware for his
06:14own chip which he designed for atheros
06:16if there was is now on buy buy buy leave
06:21quo tomorrow Broadcom but there were
06:24radios back then by Broadcom Marvel and
06:27atheros which was atheros the big chip
06:30that you see is the flash the middle
06:33chip above that is the controller
06:34because the reason the rights between
06:36the camera and and and the shape and the
06:40the load chip on the top right corner is
06:43the crystal that does the radio
06:45frequency so 2.4 gigahertz 5.8 4 n G
06:51so that was the card that we made after
06:53a few months all the way fast-forward to
06:56our newest card which we made before we
06:58got acquired about six months ago that
07:03card had half a gig a net today's cards
07:06had three two gigs of course it can do
07:0964 128 you know it actually even a
07:13terabyte but that card is what we had
07:16the very last card that we had before we
07:18actually sold the company so that's the
07:20history between that I'll talk about a
07:24little bit of what we did it's hard to
07:26see we raised about 50 million dollars
07:32during this the last Bend of the company
07:34so by all measures were firing on all
07:40cylinders we raised in a after we had
07:43revenue from beta we had beta that
07:46basically we presold 10,000 cards and
07:50we couldn't even afford to make them but
07:52we actually sold beer cards this is
07:54before Kickstarter before IndieGoGo so
07:56we in a way crowd funded our company
07:59because we then raised the money yet
08:03but we raised from angel so I actually
08:04raised a million dollars for us with my
08:08co-founder the first year so we raised a
08:10million from angels then we had beta
08:12then we had revenue we're revenue so
08:16then we raised the a five and a half
08:18million on the a paired with 1 million
08:20from the seed uncomfortable note same
08:24rules us today main differences we had
08:26no caps back then today you actually
08:28have a cap on convertible note launched
08:32the company actually pre launched it by
08:35mistake lessons learned never pre-launch
08:38until you actually ready so 2006 q3 we
08:43actually launched in retail we were
08:45finally ready we raised our money we
08:48hired a new CEO to help us with a retail
08:51launch and we launched at Amazon and
08:53bestbuy.com Cosmo comm all of their
08:58online retailers but not bigger motor so
09:01just online it was easier for us to
09:03maintain our inventory
09:05as a small company and now go into mass
09:07retail learn from our mistakes do it
09:10only online and then after you after you
09:12know we learn from our mistakes we then
09:14went into mass retail we raised a B and
09:18a C every year and a half
09:20typically you raise venture so every day
09:22every time the arrays you raise
09:24hopefully on an up round otherwise he
09:28doing it down round it means you
09:29actually have more dilution and it's
09:31horrible each one of our raises was
09:33always an up round so six and a half
09:35twelve eighteen and twenty a last round
09:39was from DoCoMo DoCoMo gave us twenty
09:43million dollars to build their cloud and
09:46that was on a valuation of about 120
09:49million post so grew the company had
09:55sales in every major retailer in every
09:58major country 48 countries sold millions
10:03of cards online brick-and-mortar
10:08globally so pretty much you can see
10:13every major retailer from every country
10:16in every region we've covered it was
10:20totally awesome we also did something
10:23really really major these memory cards
10:26were being seen by the camera as a
10:29memory card only but the card had to up
10:33had to upload the photos Twitter your
10:36phone this is fast-forwarding now now
10:38the cards are going to your phone or
10:40your iPad or your Android or your
10:41computer at home or the cloud anywhere
10:44they're going everywhere so the court
10:47has to upload and it needs power if he
10:50doesn't have power it can't upload the
10:52power is being given to it by the camera
10:54so the card slot is powering it if the
10:57camera is being turned off there's no
10:58power we can't upload so we had deals
11:01with every major camera company in Japan
11:05actually also Korea and Germany but most
11:09of the companies are in Japan so a top
11:1212 OEMs put firmware in the camera for
11:18basically mean that if the kind sorry if
11:21they swing my my cough drop if the
11:27camera so the card is still uploading it
11:30would still keep power to the card slot
11:33when the card was done uploading it
11:37would tell the camera turn off and the
11:39camera turned off this is pretty
11:41monumental for small company in the Bay
11:43Area to have the inroads with twelve of
11:46the biggest camera companies in the
11:48world go into tens of millions of units
11:51shipped so first it was Nikon we didn't
11:55believe that they actually when they
11:57came to us well she didn't believe they
11:59would not screw us but we were told that
12:03if somebody from from Japan comes to you
12:05and they and they promise you that
12:07actually you will work with you you
12:10best thing we've done because Nikon
12:12supported us in the camera and when
12:15Nikon did everybody else followed suit
12:17so I caught stacking
12:19don't go after after your tier 1 o a.m.
12:25or you know dream come true company at
12:27first go after tier 2 or tier 3 in our
12:29case mekin actually is when the top we
12:31come companies but once they believe in
12:35us and once they put us into their
12:37firmware of other cameras everybody else
12:40followed suit and like literally there's
12:43no company today that makes cameras that
12:46doesn't have Wi-Fi support in the camera
12:48even though they even if they have Wi-Fi
12:50built in today they have I Phi because I
12:53figure actually does the Wi-Fi better so
12:57by every measure we're doing everything
13:02we hired awesome CEOs we kept growing we
13:05up we opened offices all over so we had
13:09enough us in Europe and F was in Asia
13:11and office here in LA totally awesome
13:15had major deals with every major camera
13:18guy and major deals with every major
13:21retailer so we're firing and also unders
13:24so what we should have done is exit then
13:28and we had chances to and
13:32we had the most amazing fun I mean we're
13:36seeing success we're seeing sales keep
13:40growing the camera the camera industry
13:43even though it's trying to flatten out
13:45because of smartphones as a camera as
13:48cameras became flat and flat means
13:51instead of selling 80 million you know a
13:53year units they sold 70 million units
13:56here still a big market we added more
14:01countries in more areas and more
14:04continents and more distribution so as
14:06the camera industry's tried to flat and
14:09go down we still grew and year-over-year
14:11we still did the right thing we still
14:14grew the business we still became more
14:16and more profitable it was just totally
14:18amazing to see the company grow but we
14:21didn't exit so it's actually the last
14:26thing you want to do when you're having
14:27literally when you're having fun you
14:29don't want to stop and that's the
14:33biggest lesson that if you guys take
14:36home from today when you're having the
14:40most fun you're gonna have chances to
14:42exit and people will come to you and
14:45offer you maybe meaningful offers maybe
14:48you know maybe not but you will not be
14:52thinking about it all you're thinking
14:53about growing the business hiring doing
14:57the best thing for the business and for
14:58your investors which usually doesn't
15:01mean stopping soon it means keep keep
15:04the business going and growing it but we
15:07should be doing is when you have the
15:10most fun that's when you exit so you
15:14really this is a major major lesson and
15:18I think the companies like YouTube
15:20they're it right companies like
15:21histogram that are right there are many
15:23companies that thought that they would
15:26not catch it right and didn't want it
15:28because they thought that if the exit
15:31they would lose their culture or lose
15:34their team lose their products maybe but
15:38usually what happens is when you get
15:40acquired or when you exit you actually
15:43have more funding to do yours
15:45and you have more revenue and more
15:48resources to actually work on your baby
15:51so putting it into into you know actual
15:55graph because you guys are all engineers
15:56so you geeky so I get it so your life or
16:00the company will be a massive chaos
16:02you'll have ups and downs it's gonna be
16:07overall though you should see the trend
16:10going up and you'll feel it employees
16:12feel it you as a co-founder feel will
16:16feel it your VCS will feel it if you
16:18don't go up overall even though you'll
16:21have tons of bumps in the road you'll
16:23know your place will know they will
16:25leave you excusable know they'll put
16:28pressure on you to put in a new CEO or
16:31hire a new VP of Marketing we've gotten
16:33through all that stuff but overall we
16:36had a massive beautiful you know yeah
16:39graph up so you'll feel it and as you
16:45feel it you really should be thinking
16:48when do you actually exit so here is
16:50putting everything into a picture that's
16:55the optimal exit is when you're having
16:57the most fun and that's what what I will
17:02keep claiming and that's what people
17:04will argue that you should keep having
17:08fun and and keep you know building the
17:10business but actually if you time it
17:13right the optimal way to make the most
17:17for your investors for your employees
17:19for yourself is when you having the most
17:21fun most companies missed that point if
17:25I did they some companies some some
17:29entrepreneurs catch it right on top and
17:33mind-blowing I mean for example the
17:35founder of flip salt flat to Cisco
17:38cut it right on top he's brilliant in
17:41raising money he's brilliant in exiting
17:44Cisco a year and half later killed flip
17:47because they knew that the smartphone is
17:49gonna kill the camcorder industry but
17:51flip they're an amazing job they were
17:53into retail they had the best camera out
17:56there with a single red button it was
17:59they hurt the entire camcorder industry
18:01and they had the best product and they
18:04had the best time to exit so they
18:06literally call it were on top because
18:08they were about to crest and Jonathan
18:11Kaplan had off to him did an amazing job
18:14and there are a few other cases but not
18:16most companies either go down most go
18:21down and they had a curve but they
18:24didn't even realize they actually had a
18:26curve there so that they fume out the
18:28amount of money whatever but you know
18:30most companies go down some of them had
18:32the chance but didn't and some do exit
18:35and that's where I fight was they exit
18:38but there's a too late so by the time
18:40that you exit your market is trying to
18:43shrink everyone knows it so your offers
18:47gonna come in at a lower price so I Phi
18:51Han exit made some money could have made
18:54way more money if we did earlier so
18:57that's the big lesson learned that only
19:02a very very very small portion of
19:03companies do time it right most never
19:06time it and some will time it but they
19:09will time it incorrectly so you're
19:13asking you know if you're having fine
19:17why actually stop and if you're having
19:20fun and you're stopping because you've
19:22exited will you literally stop having
19:25fun and the answer is no you will not
19:28you will keep having fun because you'll
19:30have more of these resources so for
19:34example take let's take an Instagram for
19:36example they were big but they became
19:39way bigger as part of Facebook because
19:41they hired the resources YouTube was big
19:44they became infinitely bigger heard of
19:47Google they didn't lose the culture they
19:49lose the core they didn't lose any other
19:51parks did they became massive because of
19:53Google's funding so the founders made
19:56money and they kept growing it so it's
20:00not the case that if you actually exit
20:02you will lose out in many cases you will
20:11really the biggest lesson that that we
20:19learned had I had this insight five
20:24years ago when we raised our twenty
20:26million on 120 I would have exited then
20:29we had we had offers throughout the the
20:32company's history and we always wanted
20:35to just keep building the business and
20:36keep doing what we're doing and that was
20:44will they company that choirs you kill
20:49your culture sometimes but those those
20:53things are all negotiable so let's say
20:54they're you're getting an offer to be
20:56acquired and right now by the way I'm in
20:58the middle of doing it again but this
21:00time I'm that time it actually right so
21:03my current company were in the middle of
21:05an M&A process and that's why I'm saying
21:07don't tweet and we're actually gonna
21:10time it right we realized there was a
21:13window we're doing it right but this
21:15time the management team is much much
21:17more senior than what we were when we
21:20were doing it and that's really why I
21:22joined them and so it's possible that
21:27your culture will be changed but all
21:30those things could be negotiated if you
21:32get acquired you can say keep my company
21:34here keep my my building here keep my
21:37core engineers here or you can say okay
21:41moving over to you guys but all those
21:44things are negotiable and the most
21:45seniority that you have in doing this
21:46they the more likely you were to
21:50actually have an outcome that is good
21:52for you guys the founders and for the
21:54and the employees and the VCS that's it
21:59short sweet let's have questions thank
22:11yeah so the question was how do I think
22:27of Facebook that had a chance to exit
22:29didn't and of course they they were
22:33right by not exiting absolutely with
22:37with a business like everything in life
22:41there's tons of luck that plays into
22:44this so certain dippity something that
22:46usually you know you actually talk about
22:48in MBA school engineering school you
22:50talk about building bits and bytes and
22:53that if you do the right thing you'll
22:54grow the business luck is a massive
22:57force in business luck sir and dippity
23:01completely massive massive forces who
23:05knows what would have happened Facebook
23:07of course is amazing today but there are
23:11only a few Facebook's if your instagrams
23:13few YouTube's I'm sure to tell you guys
23:16how to do it when you not that size and
23:21don't hope for a Facebook you know
23:23everyone hopes for a Facebook and
23:25Instagram in YouTube
23:26great but I'm being pragmatic here I'm
23:29saying you probably will not be a
23:31Facebook or snapchat also snapshots they
23:35had offers to get quite for 1 billion
23:36two billion five billion than 10 billion
23:38they now just raised four billion
23:40they're gonna IPO so they held out
23:44awesome I hope that they succeed you
23:48never know but because they demi IPO and
23:51who knows what'll happen after after
23:52that I'd IPO but they held out they are
23:55doing the right thing
23:56probably for them and they held out but
24:00had they exited at 1 billion two or
24:03three when they were offered to be
24:05acquired by Facebook for example who
24:07knows if they would have changed their
24:09path or not you just you just don't know
24:14but there is a saying you know a bird in
24:17the hand you know is better than nothing
24:19so the Bay Area tries to tell you to go
24:22for these massive billion-dollar exits
24:24and hold out for the massive exit and
24:27until you hold out for that you're not
24:29gonna be good when I'm saying it's
24:33better to have a few small exits keep
24:37doing that and keep having the exits and
24:40keep building value for your
24:43shareholders and for yourself versus
24:45hold out for 10 years and then maybe or
24:49maybe not exit any more questions yeah
25:14so question was sorry non-coffee
25:18question was my dad washed out or do I
25:22have plans to have more fun no no we're
25:25gonna keep having fun and I'm 44 I have
25:29at least 20 years of work and even if I
25:32could if tomorrow I retired I would
25:34probably still keep working so I want to
25:37keep doing this because because being
25:40entrepreneur is really a disease because
25:43you keep doing it even though it's the
25:45you get crap from every angle and it's
25:48the hardest thing that you'll ever do
25:49and you're gonna keep doing it so I'm
25:50gonna keep doing it and but while I'm
25:53doing it I'm gonna try to actually exit
25:55and make money out of it while having
25:58fun but it really is a disease because
26:01you get punished and you keep doing it
26:03so right now I'm at a company that was
26:10started by one of my IFI co-founders and
26:15we started to actually build out a smart
26:17camera so we're building a smart camera
26:20and we have an amazing company in Japan
26:24that's sponsoring us to build a smart
26:27and at the same time we actually
26:29realized that while building this smart
26:31camera everything that we built for this
26:34technology in terms of Android and Linux
26:37being real time and hard wheel time and
26:39vision can be applied to many things
26:41like robotics like cars like cameras
26:46anything that needs real hard time Linux
26:49and Android so we're selling we finished
26:53the project for this company in Japan
26:56and I'm on the road selling having
27:01having a blast and this time we had time
27:04and right and then after this I'll
27:09hopefully make tons of money keep doing
27:12it's just can't can't can't stop so the
27:27question was while we were building it
27:29how did we protect ourselves from
27:31companies stealing it execution so we
27:36have patents we have many patents filed
27:37and for seven years we had no
27:40competitors because what we do actually
27:42is really hard to do in terms of I mean
27:44we really built the world's most
27:45computer it's a real it's a real
27:48computer with the tcp/ip stack it's
27:50doing a lot of things that your DOMA
27:52computer does but it's inside a memory
27:54card but doing that well is really
27:57really hard so eventually seven years
28:01later a company in China started to copy
28:03us but it did a horrible job
28:05horrible horrible job sorry that went
28:09nowhere because it really is hard to
28:10make to talk to actually do right and
28:12even if you did do it right they didn't
28:14have all of our deals with the camera
28:15guys so even if the card came in they
28:18couldn't emulate our IFI card because we
28:20had IP there was with the camera guys so
28:24it's not patents patents will never
28:27protect you because big companies will
28:28come in and hurt you and you can't
28:29afford to actually sue them because
28:31they're just massive and you small so it
28:32really is execution we kept hammering it
28:35and we kept doing amazing things and we
28:38kept growing eventually we had
28:41- Sheba in Japan do an okay job what we
28:47didn't do right is we file their patents
28:49in the US and in Europe and now in Japan
28:53of course we didn't do China because
28:55China there's no reason to file anything
28:56there because this is pointless
28:58but Japan we should have filed we didn't
29:02Toshiba went after us even though their
29:05card was inferior to ours they actually
29:07went after us in Japan and Japan was our
29:11home turf because we did all these
29:12camera deals so that did start to hurt
29:15today if you go to our fights website
29:17and you see click and they were debye it
29:20points you to toshiba's amazon card so
29:23he actually did as we exit cell portion
29:27of us of our IP to Toshiba and the
29:29company is not part of reco Pentax so
29:32our exit was selling the cloud part the
29:35cloud they for structure the entire app
29:37layer to reco Pentax and the card
29:41business to Toshiba so they wanted to
29:43actually have our IP in the cameras and
29:46they couldn't so they bought a part but
29:49for the most part you can't have any any
29:52protection it's just your execution ok
30:02so the question is how's the landscape
30:04changing for venture capital this year
30:07will be a good year because they were
30:09really worried for a while so they
30:11actually sat on their funds so they were
30:14sitting under funds for a long time for
30:16about two years because of worried you
30:19know what'll happen so this year will be
30:23a year so they have these massive funds
30:25they're sitting on so they're actually
30:27have to actually start to spend it so
30:30you see a good year for venture capital
30:33but it's gonna be the same thing these
30:35will always invest when there's
30:38commotion on the street so if you go
30:39Sand Hill Road and if you have one VC
30:43that's interested they all go to you
30:47know the Madera restaurant ascending
30:50Road right does that hotel and the
30:52restaurant always hang out
30:54what's this commotion in the streets
30:55you'll get calls from other VCS as well
30:57so what will happen is you have to
31:01create commotion and that'll always be
31:02the case you you know they will go for
31:05ideas that they believe are only good if
31:08they've been funded by angels well you
31:11should have probably asked this how's
31:13the angel market to change you because
31:14the VCS market hasn't has really changed
31:16that much their bankers they have LPS
31:20LPS or colleges usually they invest in
31:23the fund so the VC market hasn't really
31:25changed the model the Angels have
31:28changed because the angels are the ones
31:30who actually got screwed by the VCS so
31:33used to be that there was no cap on the
31:35convertible note term sheets now there
31:37are caps but still happens as angels get
31:39washed out by the VCS
31:40so they realize they get washed out
31:43AngelList try becoming big but finding
31:46an angel an angel list is tough because
31:48the only gov companies devotee had
31:50funding before so it's sort of like you
31:52know a particular neg so if you have
31:55some funding for as a family you can go
31:56to angel list and you can get some
31:58funding from some angels but the way
32:00that has changed is now they have these
32:02syndicates and the syndicates work like
32:05VC funds but the not a VC found they're
32:08actually a collection of small angels
32:10they go in together so your parents your
32:13parents your sister different family can
32:14be a syndicate and you wouldn't take
32:17their money because they were your
32:18parents or your family and you shouldn't
32:21take their money because the body is not
32:23very green and if you want our mission
32:25what I mean by that but a syndicate is a
32:28basket of other angels that are taking
32:31the risk together because there's one
32:33guy who's controlling their syndicate
32:35who's who who gets a caring same way as
32:37we cease do so the VC is gonna carry by
32:41managing the company and so they're
32:45controlling manager or the syndicate on
32:50has a carry so when any company is in
32:52the basket of the company's exit they
32:55get more from their fund so Angelus
32:58really changed it and syndicates really
33:02changed the angel platform so that way
33:04the Angels get screwed less
33:09any more questions yep
33:11how did you meet with your co-founders
33:14and determine but this is a very
33:16personal drug to calculate okay so a
33:19question was how do we meet as
33:21co-founders and how do we decide this is
33:24the right thing to do so I so oh that's
33:33start a company with people that you
33:35love and people that you're friends with
33:37because you're gonna see them way more
33:39than gonna be seeing your spouse or your
33:41partner so we're friends and we started
33:47it with a belief that we can change the
33:49camera industry we had an idea we had
33:52two different ideas that kind of morphed
33:54into one idea but we had we saw this
33:56need and he wanted to solve it and we
33:59saw that nobody else is offing it so we
34:01started having you know meetups we still
34:05had our day jobs and we still got a
34:07salary I'm a huge fan of not stopping
34:11cold turkey and not stopping the money
34:13flowing in because if it does then
34:15you'll be really really hard-pressed to
34:19sometimes make the wrong decisions if
34:22you actually have some income flowing in
34:24the beginning you can save that when
34:26you're young that's awesome you can save
34:28up and if you're still single you don't
34:30have the mortgage and the kids I I
34:32already had the mortgage and the kids so
34:35and it was still painful we had hot dogs
34:37for a year but we went full-time when we
34:42raised our first angel because then we
34:45knew okay we have something here it was
34:47easy to raise for the first angel and
34:49after having him we had the next 11 also
34:52fairly easily so I'm a fan of
34:56bootstrapping it's for as long as you
34:58can keep your day job when you have a
35:01team around you that believes in you and
35:03your co-founders believe in you and you
35:05believe in them then you can go
35:07full-time in terms of finding
35:09co-founders meetups if you don't have a
35:12networking so hire network I've been
35:14here for since 80 since 92
35:17after nine but 92 was my first full-time
35:20so I've been here for by then about 10
35:22years 15 years so I didn't network if
35:25you have no network meetups
35:28there's tons of meetups ok so question
35:45was if you compare Angels to VCS which
35:48ones are the easiest to get funds from
35:51angels will be the ones who believe in
35:53your dream and they'll give you 50 K
35:56hierarchy and then there's the super
35:58angels that give you millions but if you
36:00go for friends and family I would say
36:04only go for friends and family that have
36:09at least a net worth of a million
36:11dollars so if they give you 50 K they
36:13won't come after you if you actually
36:14lost at the 50k because the odds are you
36:17will you will lose their money much more
36:20than you actually make the money so
36:22their money is not as green as a VC they
36:27can actually give you introductions for
36:29example so what happens is when you go
36:31to angels you should go for angels that
36:34for them 50k is for the normal person
36:37look like 5 bucks 10 bucks it means
36:40nothing to them so if they can spend on
36:42you 50k it doesn't come off the bottom
36:45line is easy for them to actually accept
36:49so angels are way easier because there
36:52are many more of them most of the Apple
36:54Facebook Google employees are angels you
36:57know anyone with at least 1 million
36:59dollar of net worth can be an accredited
37:02investor an investor can invest 50k and
37:07above and I wouldn't take money for less
37:08than 50k because if you take money from
37:1025k or 10k for example it costs my to
37:15take money so if you inve you take money
37:17from an angel and their a friend of
37:20yours but the only wire to give you 25 K
37:23that's dangerous because they couldn't
37:25feel comfortable with 50k or hurric a
37:2725k is not a lot and it means that they
37:31had enough pain to give you 50
37:34and it means that if you actually do
37:36lose the money 25 to them will be a lot
37:39more meaningful than a million or ten
37:41million to a VC so their money is less
37:43green than the VC is money but they're
37:46easy to get my friend so other any
38:05positions aren't the number of investors
38:07no so if the more you raise the more you
38:10dilute so the way that it works is you
38:12have a cap table and the cap table can
38:14keep growing and the Millennials that
38:17you take money from the more pieces of
38:20company you gave up so your evaluation
38:24and evaluation there are three buckets
38:26typically in the Bay Area and there's
38:28West Coast Rosen as east coast rules the
38:30West Coast rules have West Coast term
38:32sheets which means that you're gonna
38:35store the company and you incorporate
38:37and you create 10 million shares and if
38:41you're a one founder you have 10 million
38:42shares to yourself and that's every
38:44country the incorporates has 10 million
38:46shares if you two co-founders and you
38:48equally split family in each accept that
38:51you build you say have 4 million each
38:56and you and you and you leave 2 million
38:58for the employee pool now that 2 million
39:02is then gonna be shared among their
39:05other investors because you have come
39:06and shares and yet preferred shares so
39:08you make shares so every time you
39:10actually give money away so whenever you
39:13actually take money in from from
39:14investors you give stock away and that
39:17stock dilutes you and your co-founders
39:20and your employees so let's say that
39:23you're in the bucket of 0 6 million then
39:26there's 6 to 8 and then there's 8 to 12
39:27if you're in is your to 6 million bucket
39:30which means you have no traction and no
39:31revenue nothing your baby and you take
39:35him let's say six are ok you've now
39:39given away 10% of the company so fine
39:43but that's her ok was important to you
39:48it's meaningful if you took in a million
39:50dollars you give away a lot more than
39:5210% because you've capped with six
39:55million if we cap was ten million or 20
39:58million you'll give away less but the
40:01problem with being over capitalized
40:02which means you have a huge huge
40:06valuation which means that you think oh
40:09I'm cool I'm amazing I'm gonna have this
40:12massive relation because I want to have
40:15myself and my my employees dilute this
40:17problem is if you dilute less and if you
40:23have a massive valuation and say 20
40:27million or 30 million and then you want
40:30to go and raise a your a has to now be
40:3250 million or 80 million your your H
40:36phone has to be higher than the previous
40:39one otherwise it's a down round so if
40:42you go for way too high on the seed or
40:44on the a you screw yourself over and you
40:46becoming over capitalized
40:48my name is the many founders and make
40:51that mistake we didn't but many founders
40:54do so we were a very conservative our
40:56six and a half million was a Novation of
40:5912 pre 18 Post right so that the 12 plus
41:03the 6 is 18 our B was on inflation of 25
41:06our C was inflation of 40 and our D was
41:09an aviation of 120 sold each each round
41:12we grew the valuation that that's how
41:16you do it if you don't do that and
41:18you're not conservative at the beginning
41:21what happens is you will show yourself
41:24in the foot later on and he will hurt
41:29and you'll lose employees it happens to
41:38and funding or anything you want as you
41:40can see I'm pretty much open book thank
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