Living in the Bay area certainly has its little quirks, or rather, little quakes. I'm reading a small, but vital, booklet entitled "How to be Quake Safe in San Francisco". This handy orange-colored booklet contains useful facts like, "In the Bay area, there are an average of one and a half little quakes A DAY, and AT LEAST one a year strong enough to do some damage (the book does not specify whether this refers to damage to property or to one's person). A good habit to cultivate wherever you are is to "know how and where to take cover, that is, under the nearest and sturdiest table or desk, between rows of seats, or against a hallway wall". It also provides useful advice like "Rearrange furniture that could fall on you or block your exit" and "Be sure that glass, framed pictures or heavy objects aren't placed over your bed."
My personal favourite is "Keep a radio, flashlight, water or juice and some snacks or candy bars under you bed". Sage advice, but it's a wonder that San Francisco bedrooms aren't completely infested with mice and cockroaches. I'm also trying hard to imagine what would taste better under a bed buried underneath several collapsed floors - Mars or Snickers? Maybe, I'll just pack both. And to just to be extra safe, I'll throw in a box of "Quaker Oats" too.
You often here Bay Area residents talking about the time "When the Big One will hit" (it's never "IF.." and "the Big One" is always reverently printed in capitals). But what really gets the earth shattering here in The Valley has nothing to do with the San Andreas fault at all. Since the Internet boom, people here are much more interested in "Hitting the Big One", that is, investing into the latest Internet IPO stock whose concept has captured the wild imaginations of Wall Street and high tech investment fund managers. Every high tech CEO here dreams of achieving the superstar status of internet companies like Yahoo!, Amazon.com or eBay. Not unlike their Hollywood and supermodel catwalk equivalents, the curves (stock price curves, that is) of these leading internet companies can yield investment returns of seismic proportions and create multi-multi millionaires of its founders and early financial backers. And it seems like a new ballgame with never-heard-of-before rules is created with each round of hot IPOs.
I'm enrolled in an evening graduate business course at Stanford, "Financing The High Tech Start-up". I can tell from the start that the professor's not going to have an easy time because he faces not a roomful of forty 18-year old undergrad or MBA students, but forty experienced high tech professionals, start-up veterans, seasoned entrepreneurs, and young wannabes.
From the class list, it looks like everyone has at least two university degrees or more. The guy on my right, Duncan, is a Scottish-born chap who has completely lost all traces of his accent, lost most likely from his 10 years of high tech experience around the globe and 8 years here in Silicon Valley. He recently embarked on his third start-up company after lucking out on the last one. The first ten employees had walked away from the IPO with over US$20 million each - Alas, Duncan was the 13th hire and so, didn't quite get enough stock options to retire (so much for the lucky 13, eh?). He tells me that he's not in the class for the content - After all he's already a veteran of all the stages of VC pitch and financing, secondary financing, to eventual IPO. He's in the class to find the next hot start-up where he intends to get in early enough in the game to be in the front running for that highly coveted bonanza of "enough-$$$$$-to-retire-for-several-lifetimes". In the meantime he's settled to be a Director of Sales of a software company. "One had to feed oneself after all," he says.
In the seat in front of me, is a young Chinese girl who looks like she's just stepped out of college, but her business card reads Diane Richardson, Senior Electronics Development Engineer (in the melting pot that is Silicon Valley culture, never assume that a Chinese person has a Chinese name). In the five minutes that we've been sitting there, Diane's already obtained a lead from Duncan to get an appointment with a venture capitalist (VC) friend of his to make yet another financing pitch. She's formed a start-up with some close friends and has already made financing pitches to several VCs. After reviewing her team line-up, the VCs had bluntly told her to get rid of some of her friends as they "did not contribute the right expertise and enough experience to the company" (In business-speak, they did not sufficiently "value-add") and so, reduced her company's chances of success. After all, once VCs "give" you the money you so desperately need, they become controlling owners of your company. In the brutal reality of the start-up industry that operates at internet speed, there is no room for the slightest perceived weaknesses, including, it would seem, keeping your most trusted friends as partners. Of such hard stuff do entrepreneurs have to made.
Right from the onset, the professor declares that he will not sign any NDAs (Non-Disclosure Agreements) nor sign "anything else, for that matter". His second proclamation belies his motivation to conduct the class - "I am also a business consultant. I'll provide advice to your start-up in exchange for a 5% pre-financing stake". In internet time, you always cut to the chase - No time for wasted words, your competition ain't wasting theirs. I remember a classic Dilbert comic strip which said that consultants are "people who like to CON and inSULT you"...perhaps, one should also add "AND get 5% of your company for doing so".
The course itself covers all aspects of getting from the proverbial "light bulb idea" to the IPO - covering business plan formulation, business strategy, bootstrap, VC, corporate and angel financing, second-round financing to eventual IPO and public listing. The hands-on course requires us to form actual business start-up teams and, of course, compete with each other. The professor will select the five best business plans in the class, and in the final class, these five business teams will be given an opportunity to present their business plans to a panel of invited VCs and angel investors.
Duncan, Diane and I were the first three people to arrive for the class - That's how we had met - so, we've decided to form a team (In Valley-speak, this is called FMA - First Mover Advantage). It's my first lesson in the start-up game: It pays to get in early...
