How Startups are Built: Important Lessons from Successful Startups Presented by: Gregory Phillips 1 The Original “Startups”
Hewlett Packard (HP), Oracle, and Sun Microsystems
HP was founded in 1939 David Packard and Bill Hewlett
Oracle was founded in 1977 Larry Ellison, Ed Oates, and Bob Miner
Sun Microsystems in 1982 – Scott McNealy, Vinod Khosla, Andy Bechtolsheim, and Bill Joy
Provided basis for the startups seen today 2 Hewlett Packard (HP)
Known as the company that birthed Silicon Valley
Started in a garage in Palo Alto
Started making audio oscillators and then test equipment
Known for advances in technology: personal computers adding machines creation of desktop laser printer
Still in operation today: personal computers and printers 3 Oracle Part 1
The Titan of Databases
Story begins at IBM – Computer Scientist Edgar F. Codd Hypothesized relational database model
Founders built onto this shelved IBM technology
Allowed businesses to store and retrieve data electronically First commercial database to use Standard Query Language
SQL allowed trained individuals to: Assess, Update, Insert, and Modify Data digitally 4 Oracle Part 2
Company adopted World Wide Web technologies
Oracle is a master in Mergers and Acquisitions (M&A) Notable acquisitions include MySQL, Java, PeopleSoft, NetSuite, and Sun Microsystems
Acquisitions helped: Profitability Market share Quell competition
Oracle controls est. ~42% of the relational database market www.t4.ai/industry/rdbms-market-share 5 Sun Microsystems (acq. by Oracle)
Sun is known for making computing more approachable Specialized in computer components, storage, and servers
Began Original Equipment Manufacturing (OEM) Computervision, Kodak, AT&T, and Xerox
Released their Network File System software in 1984 Allowed convenient sharing across networks
Introduced Java in 1995 Allowed code to be written and recognized by most computers Used by Facebook for interface development (what users see)
Acquired by Oracle in 2009 6 Impact of Companies
Created technological foundations for modern life
Continue to innovate today in various capacities
Solidified Silicon Valley area in startup lure
Modern companies still follow in their footsteps 7 Moore’s Law
Doubling of computing power and halving of cost every 2 years Gordon Moore – Spotted empirical relationship
An iPhone with 4gb of RAM is around one million times more powerful than Apollo 11 guidance system https://www.cultofmac.com/639048/apollo-computer-iphone/ 8 The Present Age
Dell Computer, Google, and Amazon
Dell Computer founded in 1984 Michael Dell
Amazon founded in 1994 Jeff Bezos
Google founded in 1998 Larry Page and Sergey Brin 9 Dell Computer
Dell set out to disrupt the personal computer industry
Created his first product, the Turbo PC to fanfare
Offered risk-free returns – important to first-time buyers
Acquired customer trust and insight
Launched Dell.com in 1996
1999 – Dell was ranked #1 in PCs in the United States
Built business on fair prices, service, and quality products 10 Amazon Part 1
Amazon set out to capitalize on growth of internet
Jeff Bezos reviewed products with high SKU counts Decided to begin with books and then expand
Validated business model to much success
Next: Computer Games and Music (1998) and Toys (1999) Revenue 147.8 million in 1997 and 2.76 billion in 2000
Product expansion increases revenue creates product network effect 11 Amazon Part 2
Amazon is built on three pillars: Low Price Fast Shipping Larger Selection
Amazon, like Walmart, works diligently to keep cost/prices low
Innovation is another one of Amazon’s strengths Warehousing/Pick and Pack Delivery Return policies Consumer data 12 Amazon Part 3
Amazon follows in Oracles footsteps – Great Acquisitions Audible in 2008 Zappos in 2009 Twitch in 2014 Whole Foods in 2014 Ring in 2018 PillPack in 2018
Recommendation - Brad Stone’s Book: The Everything Store The two pizza team, door desk mentality, Always Day 1, and more
Estimated eCommerce Retail Market Share of ~37% https://www.fool.com/investing/2020/06/10/amazon-still-gain-e-commerce-market-share-in-2020.aspx 13 Google Part 1
Google set out to conquer internet search
Developed algorithm referred to as PageRank
Tried to sell to Yahoo on two occasions Yahoo made money from time spent searching
Larry and Sergey decided to build out the product themselves
Indexed websites with web crawlers – assigned rankings
Provided users better results – less time spend 14 Google Part 2
Decided to monetize venture with non-intrusive ads Higher conversions and higher prices
Created ad auction – created buyer regulated market Similar to a stock market Simplified ad buying process and maximized revenue Helped facilitate in-depth targeted advertising
Google also is known for some well-timed mergers: YouTube, Android, Fitbit, Waze (GPS), Nest (Home Automation) 15 Summary - Rules to Innovate By
“Problem scope: knowledge about a question and its answer that are important to a large and growing number of [individuals
and/or organizations]”- Bailetti, T, Technology Innovation Management Review, 2012
Improve and Overcome Continuously Progress is Iteration, Iteration is not luck
Customers care about selection, price, and their time
Example Amazon and One Click - Brandt, R. L. One Click: Jeff Bezos and the Rise of Amazon.com, 2012
Innovation does not always come from within Well timed acquisitions can bolster a company Get into the market or embolden position
It’s Always Day 1 – Never get complacent 16 Growth at all cost - Problems
Companies have problems - avoid them by doing these
ALWAYS operate with your consumer in mind Treat all employees fairly – They make the magic Run a lean operation – Avoid unconducive spending Keeping data secure – Be Proactive 17 Questions? 18 Future Uses of This Information
Study was limited to current and past companies Updated with insights from new companies
“The paradox of teaching entrepreneurship is that such a formula (for innovation) cannot exist; because every innovation is new and unique, no authority can prescribe in
concrete terms how to be more innovative” Peter Thiel – Zero to One There is no step-by-step formula 19 Sources
Bailetti, T. (2012). What Technology Startups Must Get Right to Globalize Early and Rapidly. Technology Innovation Management Review, 2(10), 5-16. doi:10.22215/timreview614
Brandt, R. L. (2012). One click: Jeff Bezos and the rise of Amazon.com. New York: Portfolio/Penguin. 20