How Startups are Built: Important Lessons from Successful Startups Presented by: Gregory Phillips

How Startups are Built:
Important Lessons from Successful Startups
Presented by: Gregory Phillips

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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

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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

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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

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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

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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

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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

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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/

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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

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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

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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

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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

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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

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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

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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)

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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

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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

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Questions?

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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

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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.

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