How Startups Are Built: Important Lessons from Successful Startups Presented By: Gregory Phillips 1 the Original “Startups”
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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.