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David Skok

"Accelerate Your Start-up" Plan by David Skok

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Author: David Skok

Company: Matrix Partners

Updated: 29-Jan-2012

Template Description

In a series of three blog posts published in GigaOm, David Skok discussed the three key phases of a start-up lifecycle, and how each phase requires a different focus, and approach to spending. This plan is a representation of these posts, plus additional elements gleaned from posts in his blog "For Entrepreneurs".

As a VC and five-time entrepreneur, David frequently sees two common mistakes being made by start-ups:

-Companies spend too much attempting to grow the business when it’s not ready for such growth; or

-Companies don’t spend enough money when the business is ready to scale.

It’s a CEO’s responsibility to decide when to hit the start-up accelerator pedal. There are times when it makes sense to step on the gas and invest aggressively, but there also times when it’s smart to keep your company’s burn rate as low as possible.

Frequently, a start-up CEO is new to the job and doesn’t have enough experience to understand what level of investment is appropriate at what time. Founder optimism makes them want to spend to grow the business as quickly as possible. The VCs on the board, whose role should be to help guide the fiscal decisions, often contribute to the problem, making the mistake of trying to spend their way out of problems like poor product/market fit or bad market timing.

To get the spending right, a CEO needs to understand the three different start-up phases:

-Finding product/market fit
-Finding a scalable and repeatable sales model
-Scaling the business

A company’s behavior needs to be dramatically different in each phase.

Plan created by OmniStrat and is not endorsed by author.

About the Author

I am a serial entrepreneur turned VC. I have a great passion for helping entrepreneurs and startups. I started my first company a few months after leaving university at the age of 21, and over the next 25 years, founded a total of four companies (Skok Systems, Corporate Software Europe, Watermark Software, and SilverStream Software) and did one turnaround (Xionics). I have had my share of ups and downs. I was lucky enough to have three of these companies go public, one was acquired, and one initially succeeded, but then failed when I moved the company to the US. I often remark that I learned more from that one failure than I have from all of my successes.

After 25 years as an entrepreneur, I became a venture capital partner at Matrix Partners, the firm that had backed my last two companies. I had worked with 15 different VC firms, and Matrix had clearly been my best partner, earning my strong loyalty with their support through some very tough times. I was excited to move to the “dark side” and be in a position to help other entrepreneurs. For the past nine years I have been investing in software and internet companies. As a VC, I have had the very good fortune to invest alongside some spectacular management teams, including JBoss, who took their Open Source business to a successful exit with its sale to Red Hat, and AppIQ, Tabblo and Diligent Technologies, which have all had successful exits, from their inceptions to their acquisitions by HP and IBM. I currently serve on the boards of HubSpot, Digium (makers of the very popular Asterisk Open Source PBX/telephony software), CloudBees, CloudSwitch, Enservio, OpenSpan, and VideoIQ.

I am very passionate about helping other entrepreneurs, having seen how important it is to get that help, encouragement, and support in the early days of creating my own ventures.