1. THINK BIG BUT START SMALL FEBRUARY 27, 2008

2. 2 FROM IDEA TO BUSINESS PLAN IDENTIFY A COMPELLING MARKET NEED HUMBLE BEGINNINGS (THINK BIG, START SMALL) WHAT WE HOPE TO HEAR FIRST HI-TECH MARKETING CAN BE DIFFICULT. SOME RESOURCES A COUPLE OF ANECDOTAL EXAMPLES WHAT WE HEAR WAY TOO OFTEN GETTING TO TECHNOLOGY, TEAM, and FINANCE MEETING MANAGEMENT WITH VCs SOME COMMON PITFALLS ENJOYING THE JOURNEY

3. 3 HUMBLE BEGINNINGS Larry & SergeySteve Chad JawedJerry & David

4. 4 HUMBLE BEGINNINGS Steve & SteveTripSandy & Len

5. 5 NEW PRODUCT STRATEGY

6. 6 WHAT WE HOPE TO HEAR FIRST… 2. MARKET STRATEGY (UNFAIR ADVANTAGE) 3. PRODUCT & TECHNOLOGY 4. DEFINING TEAM 5. CAPITAL EFFICIENCY ENTREPRENEURS CHALLENGE 1. MARKET POSITIONING

7. 7 THE BIGGEST CHALLENGE…. A.K.A. THE ELEVATOR PITCH 1. MARKET POSITIONING We networks networks. Sandy Lerner/Len Bozak Cisco

8. 8 For [target customers] Who have [compelling reason to buy] Our product is a [new product category] That provides [key benefit (which solves problem)] Unlike [competitor in new product category] We have [key point of differentiation] *Source: Crossing the Chasm HELP FROM GEOFFREY MOORE 1. MARKET POSITIONING

9. 9 For movie producers Who have post-production special effects Silicon Graphics provides computer workstations That integrates digital fantasies with film footage Unlike IBM or Sun Microsystems SGI has made a no compromise commitment to meeting film makers post-production needs. *Source: Crossing the Chasm TWO DECLARITIVE SENTENCES 1. MARKET POSITIONING

10. 10 STRUCTURE SPEED LEVERAGE TRENDS VITAMIN? OR ASPIRIN? HOW PLUGGED IN ARE YOU? 2. MARKET STRATEGY INTIMATE WITH TARGET MARKET & BULLSEYE CUSTOMER?

11. 11 CHANGE OR CREATE CATEGORY? MARKET DYNAMICS JOIN EXISTING CATEGORYDEFINE NEW CATEGORY Large Size, Strong GrowthSmall Size, Explosive Growth ADVANTAGE Price/PerformanceIP, Functionality, Brand CUSTOMERS OpportunisticLoyal MARKET SHARE Lower (often less than 10%)Higher (often greater than 50%) GROSS MARGIN Lower (often less than 50%)Higher (often greater than 65%) ACHIEVABLE GOAL AcquisitionPublic Company LEGACY Single Generation ReignDynasty 2. MARKET STRATEGY

12. 12 YOUR PLAN OF ATTACK? 2. MARKET STRATEGY

13. 13 CREDIBLE DIFFERENTIATION? Y1Y1 Competitor 1 Competitor 2 Competitor 3 Competitor 4 Competitor 5 Competitor 6 Competitor 7 Competitor 8 Competitor 9 Competitor 10 Competitor 11 Y2Y2 X1X1 X2X2 New Co 2. MARKET STRATEGY

14. 14 3. PRODUCT & TECHNOLOGY PARTNERSHIPS SIMPLICITY BUSINESS PROCESS DOMAIN KNOWLEDGE DEFENSIBLE BARRIERS? NETWORK EFFECT

15. 15 4. DEFINING TEAM NewCo. 555 Main StreetTim Jones Anywhere, USACEO (415) 555-5552 chief2@newco.com NewCo. 555 Main StreetBarney Baker Anywhere, USACFO (415) 555-5553 chief3@newco.com NewCo. 555 Main StreetAjay Singh Anywhere, USACOO (415) 555-5554 chief4@newco.com NewCo. 555 Main StreetVlad Krunis Anywhere, USAGeneral Counsel (415) 555-5555 chief5@newco.com NewCo. 555 Main StreetKaren Williams Anywhere, USAPresident (415) 555-5556 chief6@newco.com NewCo. 555 Main StreetBob Smith Anywhere, USAChairman (415) 555-5552 chief2@newco.com MAGNETS? SCARS? PASSION?

16. 16 CENTRAL CASTING 4. DEFINING TEAM

17. 17 DO THE #S MAKE SENSE? GROSS MARGIN REVENUE TRAJECTORY EBITDA CASH REQUIREMENT VS. OPEX %S & RATIOS 5. CAPITAL EFFICIENCY CASH FLOW TO BREAK EVEN

18. 18 GRASPING UNIT ECONOMICS? ABANDONED CART RATE COST OF CUSTOMER ACQUISITION LIFETIME VALUE PRODUCT/BRAND ASSORTMENT INCENTIVE PROGRAMS ACTIVE CUSTOMERS/MO. CUSTOMER CHURN/MO. FREQUENCY PURCHASE TRENDS NEW CUSTOMERS/MO. TICKET SIZE PURCHASE TRENDS #ITEMS PURCHASE TRENDS # CLICKS TO CHECK-OUT REVENUE BY DAY/WEEK/SEASON GROSS PROFIT/TRANSACTION COST PER SKUS INVENTORY TURNS SHRINKAGE PICK RATES DELIVERY TIME MRR COST OF CUSTOMER SERVICE CUSTOMER CONTACT RATE 5. CAPITAL EFFICIENCY

19. 19 TAKES LONGER, COSTS MORE 5. CAPITAL EFFICIENCY

20. 20 FINANCIALS SAY A GREAT DEAL ABOUT HOW YOU THINK… NOT A TIME TO BE NAÏVE UNREALISTIC OR MISLEADING FRUGALITY MARKET STRATEGY SALES TACTICS 5. CAPITAL EFFICIENCY MARKET SIZE MARKET UPTAKE MARKET VELOCITY REALISM

21. 21 MEETING MANAGING WITH VCS CHAOS? CONTROLLED?

22. 22 MOST COMMON PITFALLS GORILLA ALUMNI & AIRCRAFT CARRIERS LACK OF FOCUS OPPORTUNITY EXISTS BEFORE THE MARKET ARRIVES TOP HEAVY COMPELLING?, UNIQUE? SALES MODEL AND ASP DIVERGENCE INCINERATOR SCHEMES

23. 23 MISREAD TEA LEAVES CLUTTERED MARKETS CAPITAL INTENSIVE SLOPPY DUE DILIGENCE MOMENTUM INVESTING WEAK SYNDICATE UNPREDICTABLE DIRECTORS DAZZLED BY SCIENCE BOY SCOUT REFERENCES TOO MUCH MONEY LONG EVALUATION CYCLES SLOW PAYING CUSTOMERS GOING NATIVE TOO EARLY TOO LATE DECEIVED BY COMPARABLES DILUTIVE IPOs FEELING TOO WEAK FEELING TOO STRONG POOR CUSTOMER SELECTION STRETCHED TOO THIN NOT ADDRESSING A TRUE PAIN CANT ARTICULATE THE BUSINESS SMALL GROSS MARGINS SMALLER OPERATING MARGINS NO MODEL FOR MAKING MONEY A FEATURE, NOT A PRODUCT A PRODUCT, NOT A BUSINESS LACK OPERATING CONTROLS GROWING TOO FAST WRONG DNA BAD LISTENERS POOR CUSTOMER SERVICE DECEIVED BY SUCCESSES DRUNKEN PARADE LEADERS EYEBALLS CONVERTS TO $s CAPEX CONVERTS TO $s IGNORING FUNDAMENTALS REPEATING HISTORY LEARN FROM OUR MISTAKES

24. 24 WHAT WE LOOK FOR IN A PLAN 1. UNIQUE VALUE PROPOSITION/MARKET POSITIONING CLEAR, CONCISE, ABOVE THE NOISE; CUSTOMER VALIDATION? 2. EXPLOSIVE MARKET SECTORS, FULL OF DISCONTINUITIES AMBIGUITY AND CONFUSION ARE GOOD. HOW BIG? DEFINING? STRUCTURE/ACCESSIBILITY? READINESS? DISCONTINUITYWHATS DIFFERENT? VALUE CAPTURE POTENTIAL? NO COMPETITION – OFTEN NO MARKET; ENTRENCHED PLAYERS: INNOVATORS DILEMMA? STARTUPS: HOW MANY? OUR TEAM? SOURCES FOR DIFFERENTIATION? 3. BREAKTHROUGH PRODUCTS/TECHNOLOGY SOURCES FOR DEEP SEPARATION AND ADVANTAGE? ORDER OF MAGNITUDE? DEGREE OF DIFFICULTY? ADOPTABILITY? COMPLETENESS? DEFENSIBILITY? 4. DEFINING TEAMS MAGNET QUALITIES? DOMAIN EXPERTISE? INTENSITY? DNA BLEND? SCAR TISSUE? 5. CAPITAL EFFICIENCY WHAT IS THE FULLY FUNDED PLAN? MARGIN? BUSINESS MODEL? DIRECT VS INDIRECT? EXPENSE MODEL? REVENUE ASSUMPTIONS?

25. 25 WERE ONLY AS GOOD AS OUR NEXT INVESTMENT.

26. 26