Stanford Entrepreneurship Videos

Khosla states that any big problem is a big opportunity. If there is no problem, there is no solution, and no reason for a company to exist. No one will pay you to solve a a problem that doesn't exist, he explains.

It is important to use time to get deep expertise, Khosla notes. You need to go much deeper in understanding technology--a bachelor's degree is not enough and will be irrelevant in another 10 years. If you have a goal of entrepreneurship in mind, you must go deep in an expertise in order to advance your career.

Khosla talks about his early career development. He first tried to do a company in India based on milk from soybeans. He travelled to Carnegie Mellon, and then to Stanford University. He describes why persistence and evangelism are important. Although he was not admitted to Stanford at first, saught more real-world experience, and was not admitted again, through persuasion and persistence, he was finally accepted.

Roizen makes it clear that VCs will not give all the money up front. It is important for startups to set milestones, and develop a relationship with a VC, she says. At Mobius, VCs collect data on all portfolio companies on a weekly basis to best understand their companies. They do so to improve their companies' performance.

Roizen believes the biggest impact VCs can have is recruiting. At Mobius, she says, they have four fulltime recruiters to find the right people for all their companies. VCs also call the issues, and thus play a very critical role.

It is important that the startup team have experience - a combination of grey hair and youth is good, says Roizen. VC's have learned that it is not wise to fund a team with only college students, but older people cannot get funding without youth. VC's are looking for a technology to exploit with a team of individuals comprised of young and experienced members.

Roizen talks about performance and limited partners in venture capital. Smaller funds on the most part are suffering. A large funds success depends on what a startup's past performance has been.

The most successful teams and ventures demonstrate passion and the ability to solve problems and create solid business plans, Roizen says. Yet, they were not in it to get wealthy. The strength of the team was their cohesiveness, she says.

Roizen talks about the importance of bootstrapping and maintaining control of the company in the early stages. Not only do entrepreneurs have to work for a living, they also have to make the money raised last for a longer time. When capital became easily available, Roizen notes that people stop making money the old fashion way: by working. If you make profit, you don't need other people to invest in your company, she says.

Roizen talks about the importance of customers. She shares a story where an entrepreneur identified a problem, took time to develop a solution, and got real customers to pay him to make the product.

Roizen says VCs look at how companies behaved during the downturn. Mobius was upfront with their LPs about where they stood and this paid back. Entrepreneurs that were gracious and upfront will be backed again, she notes.

Heidi Roizen explains the advantages of using existing profits to fund new ideas, as the resulting startup is not beholden to anyone else. She also states the importance of attracting venture capital, but only at the appropriate time in a company's development.

Roizen believes that in the VC business, most companies fail. Therefore, the rare successes of their portfolio companies has to be big. Often you hear 10X, i.e. you should see 10 times your capital coming back, she says. It is also calculated as dollars in, dollars out, or internaI rate of return (IRR). The Mobius fund today has an IRR of 90%. Roizen notes you will almost never hear a VC use IRR.

Heidi Roizen, managing director for Mobius Venture Capital, explains that Mobius Venture Capital has $1.5 B under management in current fund, $1 B in prior fund, and 100 active portfolio companies. There are ten VCs at Mobius who invest mostly in software, communication, wireless, next generation and web services, she says.

Roizen reveals how much limited partners believe in their investment plans. LPs invest in VCs like VCs invest in entepreneurs. Market performance alone is not the only criteria, but she recommends not messing up two funds!