#DreamitLive

When speaking to nearly all startups about their exit strategy, it almost invariably is acquisition. But startup MandA is an area most founders know very little about and is clouded in mystery. What really happens when a startup is acquired, how does it happen, and when? Who reaches out to whom? Do you need a banker or boutique MandA firm? What are the tricks and traps on both sides of the table?

In this #DreamitLive Amit Yoran (CEO Tenable, former President, RSA and CEO, Netwitness) and Mike Viscuso (Co-Founder, Carbon Black) will share their insights on the dynamic and high-stakes process of startup MandA. With decades of experience, Amit and Mike will share their thoughts with #DreamitLive co-hosts Mel Shakir (Managing Director, Dreamit Securetech) and Steve Barsh (Managing Partner, Dreamit Ventures).

In this exclusive #DreamitLive episode we’ll take a peek behind the curtain to discuss rarely talked about topics that startup founders need to know including:

What are the top reasons an acquirer will do a deal? What are the top things they are looking for?

As a startup, how do you make yourself most attractive to an acquirer?

Are startups bought or are they sold and how does that influence the process?

Where do most deals originate? Via a partnership, strategic investment, banker, or somewhere else?

How does a startup maximize value during the MandA process?

In deal structuring, what are the pros and cons of upfront payments and earnouts?

What are the top mistakes startups and acquirers make during the MandA process?

How are a startup’s investors involved? Can they help? Can they hurt? What role do they play?

Do most acquisitions occur because a startup hires an MandA firm and starts a process?

What are the biggest challenges when working with a banker or MandA firm?

What are the expected trends in cybersecurity MandA?

Amit Yoran is Chairman and Chief Executive Officer of Tenable, overseeing the company’s strategic vision and direction. As the threat landscape expands, Amit is leading Tenable into a new era of security solutions, empowering organizations to meet the challenges of evolving threats with innovative technologies and a vision of transformative vulnerability management.

Prior to joining Tenable, Amit was President of RSA, one of the most successful security companies in the world, where he led their growth and strategy since 2014. Amit came to RSA through the acquisition of his high-growth company, NetWitness, where he was founder and CEO for the market-leading network forensic product provider. Previously, he served as Founding Director of the United States Computer Emergency Readiness Team (US-CERT) program in the U.S. Department of Homeland Security. Amit also founded Riptech in Virginia, one of the first managed security service providers (MSSP) and which was acquired by Symantec in 2002. Amit currently serves as a board member and adviser to several security startups.

Amit is an esteemed influencer and leader in the security industry. He is often sought out as a keynote speaker or media spokesperson. His unique blend of public service and private enterprise experience informs his insights, thought leadership, and engaging presentations.

Mike Viscuso drives the development of Carbon Black’s long-term company and product strategy. He was co-founder and chief executive officer of Carbon Black, which merged with Bit9 in February 2014. A business-minded technologist, Viscuso is known for his drive and sense of mission and is highly regarded in the Computer Network Operations community as a top mind in offensive security.

He co-founded Carbon Black in 2011 to provide organizations with unmatched protection, detection, and incident response capabilities. Prior to the merger with Bit9, Viscuso led Carbon Black’s rapid rise and brand recognition in the market. Viscuso earned bachelor’s degrees in mathematics and computer science at Villanova University.

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Joel Peterson is Chairman of JetBlue Airways and a professor at Stanford's Graduate School of Business. After three careers, four decades of marriage and seven kids, and demanding roles as CFO, CEO, chairman, lead director, adjunct professor, founder, author, entrepreneur and investor, Joel Peterson is often sought as a mentor and coach by leaders and aspiring leaders.

Joel shares his insights on being a strong entrepreneurial leader during challenging times and discusses strategies, mental models, and checklists that can help startup founders and company executives to innovate, become more resilient, and thrive in today’s harsh economic environment.

Topics we discuss:

What makes someone an “entrepreneurial leader,” why is it important, and how to attain it

Why trust is so critical to an organization’s success and what methods leaders can use to increase trust with a remote workforce

How to reinvigorate your team’s sense of mission and cohesiveness when everyone is virtual

In times of crisis, where the best leaders focus their efforts

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Startup Challenges and the Future of Work Steve Case is one of America’s best-known and most accomplished entrepreneurs and a pioneer in making the Internet part of everyday life. In 1985 he co-founded America Online (AOL), which became the world’s largest and most valuable Internet company, helping to drive the worldwide adoption of a medium that has transformed business and society. For the past 15 years, Steve’s focus has been on starting and scaling https://www.revolution.com/ (Revolution), the Washington DC-based investment firm that backs entrepreneurs at every stage of their development through Revolution Growth, Revolution Ventures, and Revolution’s Rise of the Rest Seed Fund, which has invested in more than 140 startups in over 70 U.S. cities.

During this #DreamitLive interview, we discuss advice Steve gives startups, where startups should be focusing their time, and what distractions founders should be tuning out. With the COVID-19 pandemic in mind, we talk with Steve about his thoughts on how this changes startups’ top priorities, creates new opportunities, and which business models might be at risk. We also take a deep look at a favorite topic of Steve’s: the growth of innovation ecosystems outside of the major tech hubs, what he calls “the Rise of the Rest.” For decades, most high tech investors have focused on three prominent geographies - the Bay Area, Boston, and New York City. How will COVID-19 accelerate or decelerate the growth of startup communities in these rising cities across the U.S.?

In this interview with Steve Case:

New opportunities emerging in a post-COVID business environment and what businesses are most at risk

How the current business environment might affect trends outlined in Steve’s book http://www.thirdwavebook.com/ (The Third Wave)

How COVID-19 might affect the future of work and the locations where founders choose to launch and operate businesses

The potential long-term impacts and second-order effects of shorter commutes, lower costs of living, and higher quality of life that some workers are experiencing during this pandemic and how large tech companies may adjust policies as a result

New entrepreneurial ecosystems that may blossom and how venture capital paradigms might shift as a result

How startups can capitalize and thrive on trends like distributed work and adjust to business development activities moving online

In this #DreamitLive https://www.amazon.com/Thinking-Bets-Making-Smarter-Decisions/dp/0735216355 (best-selling author) and former professional poker player Annie Duke (https://twitter.com/AnnieDuke (@AnnieDuke)) explains how mental models, decision-making tactics, and behavioral science can help founders make better decisions as they build and scale their companies. Particularly during these challenging times, founders and startup employees face uncertainty every day. And the best founders, like the best poker players, have a process for embracing uncertainty in decision-making, learning from successes and mistakes, and recognizing (and removing) inherent biases. With her background in high-stakes poker coupled with her research and writing on psychology, economics, game theory, and neuroscience, Annie and Steve will discuss tactical ideas for founders to improve their decision-making skills.

In this episode with Annie Duke, we cover:

How to identify cognitive biases that hurt decision-making

The difference between confirmatory and exploratory thought

How to embrace uncertainty

The importance of building a diverse set of advisors

How to distinguish between signal and noise when assessing outcomes

 About Annie Duke: Annie is an author, corporate speaker, and consultant in the decision-making space. In 2018 Annie’s first book for general audiences, https://www.amazon.com/Thinking-Bets-Making-Smarter-Decisions/dp/0735216355 (Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts), quickly became a national bestseller. As a former professional poker player, she has won more than $4 million in tournament poker. During her career, Annie won a World Series of Poker bracelet and is the only woman to have won the World Series of Poker Tournament of Champions and the NBC National Poker Heads-Up Championship. She retired from the game in 2012. Prior to becoming a professional poker player, Annie was awarded a National Science Foundation Fellowship to study Cognitive Psychology at the University of Pennsylvania. Annie is the co-founder of The Alliance for Decision Education, a non-profit whose mission is to improve lives by empowering students through decision skills education. She is also a member of the National Board of After-School All-Stars and the Board of Directors of the Franklin Institute. In 2020, Annie joined the board of the Renew Democracy Initiative.

Sarah Pillmore is the former VP of human resources and talent acquisition at two of Expedia Group’s premier brands, Hotwire and CarRentals.com. In her role, she also led the global diversity and inclusion strategies. Now, Sarah is the Chief People Officer at Osler Diagnostics, a health technology company developing innovative biosensor technology as well as being an active angel investor.

During this global pandemic, founders are facing unprecedented levels of stress and pressure as they navigate their companies through a severe economic contraction. How can founders and startup leaders best manage their teams, provide support, and encourage employee wellbeing through this crisis?

In this episode:

5:55:00- Focusing on well being

15:45:00- Keeping teams motivated and focused

22:20:00- What's imposter syndrome?

27:05:00- Different types of "imposters"

28:50:00- What can I do to overcome imposter syndrome?

33:50:00- What are your thoughts on remotely hiring employees?

37:40:00 Are we bringing bad interviewing habits to remotely hiring?

43:40:00- Remotely laying off employees

49:00:00- Default alive or default dead?

52:40:00- How do we best get HR advice like yours if we're a small startup?

55:40:00- Do you think teams will now expect to have more "work from home" days?

58:30:00- What should do now to get ready for the fall if there is another outbreak?

1:01:30- If letting people go, how do we best help others cope with survivor guilt?

1:04:30- For hiring, what are your thoughts on how to do reference checking well?

Jason Calacanis (@jason) is a technology entrepreneur, angel investor, and the host of the popular podcasts This Week in Startups and Angel. As a “scout” for top Silicon Valley venture capital firm Sequoia Capital and later as an angel investor, Jason has invested in 200+ early-stage startups including 7 "unicorns" (billion-dollar valuations), including Uber, Thumbtack, Wealthfront, Robinhood, and Calm.

In this episode of #DreamitLive, Jason shares his insights on raising capital in an economic downturn, the qualities that founders need to excel at during a crisis, how he makes investment decisions, his predictions for how COVID-19 will change venture investing in the short and long terms, and more, including:

What are the top 3 things startups must focus on right now?

What sectors will heat up? What’s going to cool off? Should startups pivot early?

How might valuations and deal terms change?

Will VC’s slow their investing pace and what should startups do about it?

What worked in 2007/2008 that applies here when raising?

Will there be a bigger impact on B2B or B2C?

When pitching pre-seed/seed/Series A or B, where does your pitch need to be incredibly strong?

During our recent Dreamit Kickoff week, Bullpen Capital Founder and General Partner Paul Martino spoke with our Spring 2020 cohort about the state of the VC ecosystem in the current economic crisis. Martino founded Bullpen in 2010 with a focus on post-seed, pre-Series A startups, and he led the fund’s investments in companies like FanDuel, Namely, Ipsy, SpotHero, Classy, and Airmap.

Throughout his career, he’s witnessed a number of economic crises, and he explained the two types of crisis we might be facing over the coming months, as well as the ways that VC deal terms and investment activity might change as a result.

Learn more:

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Friday, April 3 was supposed to be the orderly launch of the CARES Act Paycheck Protection Program (PPP) providing $349B of urgently needed funding to struggling startups and small businesses. Last Friday was anything but orderly. Our three special guests, a leading banker, attorney, and investor, are all on the front lines helping startups to secure emergency funding. Jim Marshall from Silicon Valley Bank (SVB), Kathryn Hickey from PilieroMazza, and Duncan Davidson from Bullpen Capital share the most up-to-date information and what founders need to know and do to get the assistance outlined in the CARES Act.

In this episode, guests discuss…

Biggest mistakes on applications for the PPP

What if you have a different deposit bank and lender bank?

What are the timelines on loans to be processed?

Will banks run out of funds?

What triggers the SBA “affiliation” rules for venture-backed companies?

How to amend by-laws in shareholder agreements?

Should founders expect the affiliation rules to be amended this week?

Are VCs collaborating to resolve issues related to specific startups?

Will the SBA increase the forgiven amount beyond 2.5 x Average Payroll (and other qualified expenses) if the company guarantees the additional amount will go towards new hires and agrees to be audited on that?

Final thoughts on the idea of necessity and the purpose of the CARES Act

Read more on the topic:

https://www.dreamit.com/journal/cares-act-updates (https://www.dreamit.com/journal/cares-act-updates)

Acclaimed author and thought leader, Geoffrey Moore (“Crossing the Chasm,” “Inside the Tornado,” “In a Downturn, Provoke Your Customers,” and more) will join us to discuss what companies must do to “provoke” sales during difficult times. During an economic downturn, it’s critical to persuade your customers that your product is not just nice-to-have but an essential tool for their businesses to survive. Provocation-based selling goes far beyond consultative or solution-selling and differs from product-based selling, which pushes features, functionality, and benefits. Provocation-based selling helps customers see their competitive challenges in a new light that makes addressing specific painful problems unmistakably urgent.

In this episode, Steve and Geoffrey will discuss how companies and startups can put provocation-based sales strategies to use, including:

How to identify critical issues faced by customers

How to formulate a unique point of view, or your “provocation,” around high-impact issues

How sales and marketing can adapt to formulate provocations

How to deliver the message to customers

How to adapt your organization

And, tune in live to get your questions answered during our live QandA!

About Geoffrey Moore

Geoffrey Moore is an author, speaker, and advisor who splits his consulting time between start-up companies in the Wildcat Venture Partners portfolios and established high-tech enterprises, most recently including Salesforce, Microsoft, Autodesk, F5Networks, Gainsight, Google, and Splunk. Moore’s life’s work has focused on the market dynamics surrounding disruptive innovations. His first book, Crossing the Chasm, focuses on the challenges start-up companies face transitioning from early adopting to mainstream customers. It has sold more than a million copies, and its third edition has been revised such that the majority of its examples and case studies reference companies come to prominence from the past decade. Moore’s most recent work, Zone to Win, addresses the challenge large enterprises face when embracing disruptive innovations, even when it is in their best interests to do so. It’s time to stop explaining why they don’t and start explaining how they can. This has been the basis of much of his recent consulting.

Moore has a bachelors in American literature from Stanford University and a PhD in English literature from the University of Washington. After teaching English for four years at Olivet College, he moved back to the Bay Area with his wife and family and began a career in high tech as a training specialist. Over time he transitioned first into sales and then into marketing, finally finding his niche in marketing consulting, working first at Regis McKenna Inc, then with the three firms he helped found: The Chasm Group, Chasm Institute, and TCG Advisors. Today he is chairman emeritus of all three.

https://hbr.org/2009/03/in-a-downturn-provoke-your-customers (https://hbr.org/2009/03/in-a-downturn-provoke-your-customers)

https://www.dreamit.com (https://www.dreamit.com)

The $2 trillion CARES Act set aside $377 billion for small businesses. While startups are doing everything they can to extend their runway, there is confusion on if and how the CARES Act applies to startups and what startups need to do to access this funding as quickly as possible. In this #DreamitLive, we discuss:

5:00 - Defining small businesses and who qualifies for CARES Act loans

6:00 - Do you need to rush to your bank to get this money?

7:00 - Who is entitled to these funds?

9:00 - What is the process of getting the loan? How does the loan get forgiven or turn into a grant?

11:00 - How does your business stay alive while waiting for this loan or crossing the “Covid Chasm”? What if you downsize? Will this affect your forgiveness of the loan?

13:30 - How do banks estimate what size loans you will get?

17:00 - Why employee headcount is so important when using CARES Act loans

23:00 - When will the money show up and get processed?

25:00 - Furlough vs. laying off employees? Providing health insurance?

26:00 - What should small startups with 15 employees or less expect?

29:00 - Understanding SBA rules around affiliation rules, when your venture fund has “effective control” of your startup

37:00 - Four pieces of advice for startups on taking advantage of the CARES Act

43:00 - Who should you turn to for advice and guidance on loans through the CARES Act

45:00 - What should you AVOID doing if you’re trying to get this loan?

47:00 - What types of things can the loan money be used for? Is it general-purpose money? Payroll requirements?

52:00 - Do these loans apply for overseas employees?

53:00 - How does the loan forgiveness process work?

Steve Barsh, Managing Partner of Dreamit Ventures will host and be joined by Duncan Davidson, General Partner of Bullpen Capital, who has read the full CARES Act multiple times and digested what it means for startups. Duncan is a highly experienced VC and a serial entrepreneur, having founded, been on the executive team, or a Board member of multiple billion-dollar companies.

More Resources:

https://nvca.org/wp-content/uploads/2020/03/VC-SBA-Lending-and-Affiliation-Guidance-for-SBA-Loan-Programs.pdf (Guidance on SBA Loans from the NVCA)

https://www.cooley.com/news/insight/2020/2020-03-29-sba-programs-under-cares-act (Guidance from Cooley on SBA Programs under the CARES Act)

https://techcrunch.com/pages/covid-19-updates/ (TechCrunch News related to COVID-19 for updates on guidance for SBA Loans)