Paul Graham, Y Combinator

Paul Graham is an essayist, programmer, and programming language designer. In 1995 he developed with Robert Morris the first web-based application, Viaweb, which was acquired by Yahoo in 1998. In 2002 he described a simple statistical spam filter that inspired most current filters. He’s currently working on a new programming language called Arc, a new book on startups, and is one of the partners in Y Combinator.

Paul is the author of On Lisp (Prentice Hall, 1993), ANSI Common Lisp (Prentice Hall, 1995), and Hackers & Painters (O’Reilly, 2004).

Paul has an AB from Cornell and a PhD in Computer Science from Harvard, and studied painting at RISD and the Accademia di Belle Arti in Florence.

Jessica Livingston, Founders at Work

Jessica Livingston is a founding partner at Y Combinator, a seed-stage venture firm based in Cambridge, MA, and Mountain View, CA.  She is also the author of Founders at Work, a book about startup entrepreneurs.

Jessica was previously VP Marketing at investment bank Adams Harkness. In addition to her work with startups at Y Combinator, she organizes Startup School.

Jessica has a BA in English from Bucknell.

Reid Hoffman, LinkedIn

Reid Hoffman is founder and Chairman at LinkedIn, and was the founding CEO for its first four years before moving to his current role as President, Products in February 2007.  While CEO, Reid built the company to over 9 million members and profitability.  He now drives product and business strategy for LinkedIn.

Prior to LinkedIn, Reid was Executive Vice President of PayPal, where he was in charge of business development, corporate development, international & government relations, and banking/payments infrastructure.  While at PayPal, Reid was instrumental to the acquisition by eBay and was responsible for partnerships with Intuit, Visa, MasterCard and Wells Fargo.  Prior to PayPal, Reid held management roles at both Fujitsu and Apple.   Reid currently serves on the Board of Directors for SixApart and Mozilla Corporation.   He graduated with distinction from Stanford University with a BS in Symbolic Systems and from Oxford University with a Master’s degree in philosophy.

Matt Cohler, Benchmark Capital

Matt Cohler is a General Partner with Benchmark Capital.  He has extensive experience working with consumer Internet companies, and has held senior management roles at Facebook and LinkedIn.  Matt joined Facebook in early 2005 and recently served as Facebook’s VP Product Management, where he helped drive strategy, organizational growth and product direction.  Matt is now a special advisor to Facebook.

Previously Matt was VP and General Manager at LinkedIn, where he was a member of the company’s founding team. Before LinkedIn, he was a consultant in McKinsey in Silicon Valley and also worked in Beijing for AsiaInfo.  Matt holds a BA from Yale University and graduated with honors and distinction.

Matt Mullenweg, Toni Schneider - Automattic / WordPress

Our speakers for September are Matt Mullenweg & Toni Schneider. They are respectively President and CEO of Automattic, which runs blogging software platform and web service WordPress.com (used to publish this blog), as well as several other  cool products & solutions. Matt & Toni will talk about open source communities and business models.

For more on open source, try these on for size:

• The Cathedral & The Bazaar (Eric Raymond)
• What Business Can Learn from Open Source & Hackers & Painters (Paul Graham)
• Open Sources (DiBona / Ockman / Stone)

Matt Mullenweg blogs at http://ma.tt. He is best known as the founding developer of WordPress, the blogging software he guided from a handful of users to the most widely used open source blog tool. In late 2005 he left CNET to found Automattic, the company behind WordPress.com, Akismet.com, and Gravatar. In his spare time he enjoys taking photographs and playing jazz.

Toni Schneider is the CEO of Automattic, makers of the highly popular WordPress blogging software. Prior jobs include a VP position at Yahoo where he started the Yahoo Developer Network, and CEO of Oddpost, an AJAX/webmail pioneer that was acquired by Yahoo in 2004. Toni began his career developing 3D audio software for NASA. He blogs at toni.org, is a venture partner at True Ventures, grew up in Switzerland, studied computer science at Stanford University, and was named startup CEO of the year 2007 by TechCrunch.

Naval Ravikant of Venture Hacks & The Hit Forge was the featured speaker at the August 28 Startup2Startup. Naval gave valuable advice to the audience of over 100 entrepreneurs on raising capital and negotiating term sheets. The feedback on Naval’s presentation was wildly positive, as Naval helped both first time and serial entrepreneurs peek into the black box that is venture capital.

(fyi: Naval’s slide presentation is below, and a video interview with Naval is included at the bottom)

The 10 key things that you should know when raising venture capital, according to Naval:

1. Try to maintain control of the board for as long as possible. Naval had a few key recommendations, including the design goal of having board seats reflect ownership. Common board seats will unlikely increase, whereas new investors will often require a board seat/s as part of a financing.

2. Valuation is driven by the market; don’t take every penny off the table. Entrepreneurs often focus exclusively on valuation and don’t pay attention to other key termsheet items. Naval suggested that entreprenuers get a few termsheets before aggresively negotiating valuation with anyone. And don’t take every penny off the table. On valuation, find a fair deal for both sides — “money has karma, too.”

3. Pay attention to the real impact of the option pool on founder equity. Many entrepreneurs figure that raising $x on a $y valuation leaves them with equity of y/(x+y) . So, for example, a founder may assume that a $4MM raise on a $6MM pre-money valuation leaves founders with 60% ownership. But if the employee option pool is 25% of the post-money (as it is typically expressed), but taken out of the pre-money (again, standard), that actually leaves 35% for founders (60%-25%). This is not a “trick” by investors and is standard practice — but few first-time entrepreneurs understand the importance of taking the equity pool into consideration when understanding the real dilution a financing will have on them.

4. Vesting, even for founders, is a good idea. Naval argued that many early stage companies have early founder issues. It’s not a bad idea for FOUNDERS to support a standard vesting agreement for other founders. What if a founder doesn’t work out and walks away with more equity than the entire employee option pool?

5. Ask for “standard” liquidation and anti-dilution provisions. Allowing investors to get their money out first is very reasonable and standard in a financing. Just make sure that the terms aren’t dramatically different as things can get very complex and extremely founder unfavorable once you veer from the norm. Good investors shouldn’t ask for more, at least not in a Series A.

6. Read the small print on protective provisions. The idea here is to protect minority shareholders.

7. Expiration and non-disclosure. It’s reasonable for venture firms to request that their term-sheet not be shopped. However, if you need more time to explore your options it’s also reasonable for you to ask for more time to finish your process. Don’t allow a firm to pressure you into signing before you’re ready.

8. Counsel. Get your own advocate.

9. Watch out for non-standard terms. Naval discussed new terms that he has come across in venture termsheets — for example, one-sided binding termsheets. Your lawyer should be able to provide guidance on what is standard versus non-standard. It’s generally not worth your time fighting the industry norm on termsheets, but it’s also likely not worth your time to do business with venture firms who ask for one-sided terms that are non-standard.

10. Finally, don’t forget… your 83(b) filings so that you can get the long-term capital gains clock ticking right away.

Naval Ravikant

Our speaker for August is Naval Ravikant, an experienced entrepreneur and startup investor, and occasional contributor on the Venture Hacks blog (which he co-founded). Naval will speak about startup financing & term sheets, and present a Top 10 list of startup finance tips from the best of Venture Hacks.

Naval is currently an active investor in early-stage ecommerce and social media startups via his angel fund The Hit Forge. His areas of expertise include viral marketing, seo, monetization, general management, and (of course) fundraising.

Previously he was a co-founder or investor at Genoa Corp (acquired by Finisar), Epinions.com (IPO via Shopping.com), Chainn, Hive7, and Vast.com; also an advisor to Bix.com, iPivot, and XFire, among others. Naval graduated from Dartmouth College with a BA in Computer Science and Economics.

James Hong, co-founder HOTorNOT.com

Our speaker for July will be James Hong, co-founder of the popular photo rating / casual dating website HOTorNOT. James will speak about his experiences as a scrappy entrepreneur, how to bootstrap a startup, and how he built a very profitable, subscription-based web business.

James is a creative, unorthodox, and scrappy Silicon Valley entrepreneur. He came up with the idea for HOTorNOT while drinking (heavily, we suspect) with fellow co-founder Jim Young in October of 2000. In its first week the site topped 2M daily pageviews, and became an immediate cult hit. With *zero* angel or VC funding, HOTorNOT grew quickly to a multi-million dollar subscription business. After operating profitably out of a living room for much of its first eight years, the company was sold in early 2008 to an investment group for a rumored $20M. If there’s a shrewder entrepreneur in the valley than James, we’d like to meet ‘em.

Since the acquisition, James has been on temporary sabbatical from entrepreneurship — in other words he’s at home watching television, where his latest indulgence is MTV’s America’s Best Dance Crew. James also enjoys spending time with a few of his angel investments, including Slide and Mochi Media. He is currently waiting for the economy to completely tank before embarking on another venture… or until Boogie Bots is voted off the show. James is a graduate of UC Berkeley, where he earned a BS Electrical Engineering and an MBA from the Haas School of Business.

Although originally aimed at online auctions or meeting new people, they eventually moved toward a general online video solution. Chad described the idea as branching out from their experiences at PayPal and their own complications with online video. The idea was to create a video experience that users could take with them similar to the way users could take the PayPal experience with them.

They started out of their garages, eventually taking up residence inside of Sequoia before taking a round from the same firm.

Chad confronted one of the chief criticisms raised against the site, that the site achieved much of its growth from illegal content hosted on the site. He pointed out that although other sites face similar problems, they haven’t achieved the same growth, because they weren’t able to achieve the same community as YouTube.

Although the choice to sell was hard, Chad said they eventually decided to sell to Google as the best path to growing and supporting the service.

Liz Gannes at NewTeeVee has more details and a video from the event.

Chad leads business development, marketing and operations for YouTube. He was also responsible for the clean, simple user interface that makes it easy for people to upload and share videos around the world.

Prior to YouTube Chad was the first UI designer at PayPal, where he created the familiar PayPal logo still in use today. Following PayPal’s acquisition by eBay, Chad consulted for several tech companies and for the hit movie Thank you for Smoking.

Chad received a BA in Fine Art at Indiana University of Pennsylvania.

Update: here are links to summaries of Chad’s talk, as well as a few video clips.

• Chad Hurley: How We Did It (Liz Gannes, NewTeeVee)
• Chad Hurley talks to entrepreneurs @ Startup2Startup (Dave McClure, 500 Hats)
• Chad Hurley on the Rise, Acquisition, and Future of YouTube (Brian Solis, PR 2.0)

Here’s a brief video interview with Mike before his presentation.

He highlighted four main benefits of speed: beating the competition to a product, increasing morale, generating buzz, and generating advantageous investing terms. Most of his companies started off bootstraped and prototyped within weeks, and expected to launch within 4 months. He spoke of locking down office space while picking up funding. His biggest hit, DirectHit, sold within 500 days of launching.

Eric Eldon, of Venturebeat highlights his perspective from the first Startup2Startup.

When Cassidy spoke about business deals and financing he also touched on flexibility. He suggested getting all the decision makers and following a strategy of if/then contracts that make deals a no brainer if both sides meet metrics. He also spoke about aiming your first deals at secondary players more willing to get in on something new. Don’t waste your time on clients that don’t have a history of dealing with startups. And put a time table on closing deals. The prospect of closing a deal declines drastically with each passing day.

A corollary to Mike’s push for speed, was experience. Mike highlighted how most of his startups consisted of employees he’d had experience with. For people he didn’t know, his companies would hold one day hirings, where they’d interview the candidate, huddle to talk over the prospect, and have an offer out by the end of the day. Also, when you have a new employee, make sure they’re prepared for their first day.

Mike tempered his push for speed with a pop quiz question to the crowd over whether launching soon and iterating was a better strategy than taking your time. Mike moved quickly in each case (3.5 months), but acknowledged not all startups have the ability to iterate on their products in the wild.

After the speech, the mix of entrepreneurs and venture capiltalists at the tables swapped stories and advice.

The speaker for our May Startup2Startup dinner will be Mike Cassidy, a veteran of 3 successful startups. Mike’s talk is titled “Speed: The Ultimate Startup Weapon”, and he’ll speak on how to compress your business creation and product launch to just over 3 months.

Mike is no stranger to speed. He’s raised 7 rounds of venture capital for his 3 businesses totaling over $40M, which were later sold for more than $600M altogether. Five of the rounds involved getting a signed term sheet on the same day the presentation to the VC firm was made.

Mike Cassidy has been co-founder and CEO of three start-ups: Xfire, Direct Hit, and Stylus Innovation. Xfire is an IM and P2P service for online gamers that lets them play with their friends more easily, and has over 9M registered gamers in more than 100 countries. Viacom/MTV acquired Xfire for $110 million. Direct Hit was a revolutionary Internet search engine whose customers included MSN, Lycos, AOL, and dozens of others. Ask Jeeves acquired Direct Hit for $500 million. Stylus Innovation’s flagship product was the award winning computer telephony software Visual Voice.

Mike’s presentation on SPEED is below:

Mike is on the Board of Advisors of Jazz at Lincoln Center and is on the Visiting Committee Board of the MIT Media Lab. Mike studied jazz piano at the Berklee College of Music. Mike has a BS and MS in Aerospace Engineering from MIT, and he graduated from Harvard Business School.