Category Archives: Start-up data

Check Point, the Israel success story

Leave a reply

After my recent posts about Israel and high-tech innovation, I discovered I did know not very well the Check Point story. Start-up Nation did not provide much info and though you can find a lot on Wikipedia or on the Facts@Glance of the company. for example, I became a little frustrated when I discovered I could not find much about the company early days and IPO. I even had to buy the IPO filing through the SEC as the document is not public on the web and Check Point could not help me with such info.

There are a couple of very interesting points:
– the three founders had equal shareholding at foundation (and afer Check Point went public).
– Gil Shwed, one of the co-founders, is still the chairman and CEO. Another unexperienced and young entrepreneur who grew his baby through adulthood.
– Many women in the management of the company, Deborah Triant at the time of IPO, but even today Dorit Dor, Tal Payne and Juliette Sultan as the executive team page shows. (This may have to be linked to Israel culture again).


Gil Schwed, Shlomo Kramer ,Marius Nacht, the 3 co-founders and
Deborah Triant (from the early web sites of Check Point)

Now the usual cap. table that I could build from the IPO filing and the shareholding pies at the end of the post.

– What is interesting is that Check Point did not raise a lot of money, mostly $600k from BRM in 1993. There were also some loans ($400k) and R&D ($160k) from BRM also which do not appear in the shareholding.
– The American VCs (Venrock and USVP) bought shares from BRM in a secondary financing, so there was no new money for Check Point.
– Check Point issued 3M new shares at IPO and existing shareholders (BRM and the 3 co-founders) sold 1.2M shares.
– Not the least impressive, it took the company 3 years only to go public and its 1995 and 1996 numbers are already impressive.

As usual, I hope this does not include too many inaccuracies or mistakes…

When a cap. table is a nightmare!

Leave a reply

As I wrote recently, IPO filing is accelerating (just check my recent post on LinkedIn and Pandora). Maybe, it should not be so much. Too much may mean a speculative bubble A recent one is Active Network. I tried to build the cap. table. Piece of cake, usually, even if I am sure, they have some mistakes. And I was lucky, Active had filed but failed in 2004 (a sign?), so I also have the 2004 cap. table. But it was a nightmare. I could not find anything about the founders, not much about how much the company really raised, even if I have full disclosure on liquidation preference.

So here is first the 2004 cap. table (once again I must mention that information given is subject to possibly many inaccuracies)

And here is the 2011 new table.

Not very sexy, not to say awful! I do not talk only about the pictures themselves that you can download and enlarge, but also about the messiness of the structure! But still interesting…

Pandora wants to go public

1 Reply

Something is going on. LinkedIn has filed to go public, many lesser known companies have succesfully done it and it is now Pandora. You can read a lot about Pandora’s filing so my contribution is limited to the following points:

– you can read below the cap. table of Pandora (and enlarge it by clicking or even download the picture, ask me for the excel file if interested)
– there were 3 founders: Tim Westergren, Will Glaser, Jon Kraft but only the first one is mentioned in the filing and the equity of the two other ones is unknown. I made the assumption that the remaining common shares belong to them, but it canot be true. It is just an assumption.
– Pandora has raised nearly $100M with its investors.
– Revenues are nice: $50M in 2010 and $19M in 2009, but the company never had a profitable year even if its recent quarters have been (about $1M for the July and october quarters).
– The company was founded in 2000, so it would have taken him 11 years to go public.

Will this be sufficient to concince investors? To be seen….

Start-Up Guides

2 Replies

I have recurrent questions about how to practically setup your start-up in Switzerland. Here is a guide recently published by the Swiss Innovation Agency (CTI/KTI): Gründen 2.0 – start-up guide – From an idea to an enterprise: information and tips for setting up a company in Switzerland (pdf file).

I’d like to add also the very good guide Olivier Ezratty manages for the French start-ups: l’accompagnement des startups high-tech en France (pdf file).

LinkedIn files to go public

4 Replies

The much anticipated filing by LinkedIn was announced last week and I could do my favorite analysis, the capitalization table and equity structure of the start-up. My main frustration came from the fact that there is no information on the founders’ shares. LinkedIn has five founders and only Reid Hoffman shareholding is known. Wikipedia states that “the company was founded by Reid Hoffman and founding team members from Paypal and Socialnet.com (Allen Blue, Eric Ly, Jean-Luc Vaillant, Lee Hower, Konstantin Guericke, Stephen Beitzel, David Eves, Ian McNish, Yan Pujante, and Chris Saccheri).” Linkedin mentions them in its Founders web page. This just means their equity level is rather small… here is LinkedIn cap. table (assuming a virtual IPO date and price per share).

Another interesting disclosure is the full list of LinkedIn investors:

Success is Management of Failure

1 Reply

“Of course, business, just as life, is never a smooth curve. Failure can come as quickly, and more unexpectedly, as success. But true success is management of failure. Every time you hit a bad patch you must be able turn your fortunes around. That’s why it’s important to be always prepared for failure and build strong teams. To be a successful entrepreneur, venture capitalist or philanthropist, you must bring together people who know there will be problems, love to solve problems, and can work well as a team.” … “It reminds me not to be too proud. I celebrate failure — it can temper your character and pave the way for great achievement.” Kamran Elahian.

Kamran Elahian is a famous Silicon Valley entrepreneur. He was the founder of Cirrus Logic which is famous enough to be in the Silicon Valley Genealogy poster. The extract below lists the founders of the company, you can not read their names but they were 5 and here what the poster says: Suhal Patil (Patil Systems), Michael Hackworth (Signetics), Bill Knapp (General Instruments), M. Kei (Intel), H. Ravindra (Patil Systems) and Elahian himself (CAE Systems). Strangely, Elahian has a different list on his website — Suhas Patil, H. Ravindra, Bill Knapp, Mark Singer.

Nesheim in his book High Tech Start Up also mentions Cirrus as a success story and gives the cap. table at IPO. It is indeed his model I follow for my own cap. tables.

Then Elahian founded Centillium which unfortunately did not have the same end though its IPO was a great success. In 2008, the company was acquired for about $42M. So failure is followed by success and by failure again. Elahian also gives Centillium founders on his site: Shahin Hedayat, Faraj Aalaie, Babu Mandeva, Tony O’Toole.

In the same area of chips, semiconductor for telecommunications, there is a similar story: Atheros has just annouced it would be acquired by Qualcomm for about $3.1B. Atheros is a company I had studied in my book because its two founders are two Stanford professors (Theresa Meng and John Hennessy, currently Stanford president) and its CEO is Craig Barratt whom I had as a teaching assistant when I was studying in California. Who says scientists/engineers cannot be great business people?!!

But the (possible) interest of all this is that you can compare three stories, more than 20 years apart and you cann see that there are tons of similarities and the web2.0 start-ups I covered recently are not so different.

A typical success story (not Silicon Valley though)

Leave a reply

I just learnt about Isilon yesterday. It certainly shows how disconnected I have been from the start-up world these days :-(. Isilon was backed by Atlas and Sequoia and went public in December 2006. It finally got acquired this week by EMC for $2.2B!

Fred Destin mentions about Isilon in his blog so you will find more info there. What I did since yesterday is looking at the company numbers since its foundation in 2001. So first, here is its stock price history as well as its revenue/profit numbers.

It was not an easy success story. Following its IPO, the company missed its numbers, lost money (no profit) until this year so that the stock price does not show a nice growing curve (even if the VCs always had a nice multiple on their investment). But the company had to wait until the acquisition by EMC to see happy employees and investors. Destin claims Atlas will finally make a 22x multiple over its investment.

What is for me (and I hope for you too!) of interest is the shareholding structure that the next table illustrates. You will have to click on it to read the details. (As usual, if you want the excel file, just ask me).

What the IPO prospectus did not say is as interesting as the rich information it provides:
– not much info on the series A and B, except the total amount, but I could not distinguish Atlas, Madrona and Sequoia investments. It would probably possible to guess the real numbers as Sequoia invested (and probably led) in the series B whereas Atlas and Madrona invested in the Series A. With prorata rules, you can make your own guess.
– Paul Mikesell, a co-founder, is not mentioned anywhere so I have no clue how much he owns/owned of the company…

Finally, Isilon was not based in Silicon Valley, but in Seattle. It’s interesting to connect this to a recent post by Bill Curley entilted the Silicon Valley IPO’s anxiety. Though Silicon Valley remains a craddle of innovation, the ratio of IPOs its experiences compared to the rest of the USA, is quite low and Curley has some explanations.

PS (November 18): I was wrong, there was more information available online: I could find the precise allocation of preferred stocks (notice there was a 2.4 stock split) and in addition Mikesell is mentioned…

Google vs. Facebook

1 Reply

Is Google losing traction to Facebook? When I begin to read such things as Google Offers Employee $3.5 Million Not to Join Facebook or Google-Facebook : la guerre des talents est déclarée (the war for talents is declared) in the serious French newspaper Le Monde, it is probably time to wonder.

The funny thing is that when I had lunch last week with a Swiss entrepreneur who needed contacts in Silicon Valley, I discovered that one my eBay contact was now at Facebook, one of my Microsoft contact was now at LinkedIn, so at the micro or macro level, there is something going on.

You know Google is one of my favorite topics. I regularly look at their growth for example. So here is it again. Too early to say if they are in the slowing part of the S-curve…

Facebook numbers? it’s rumors mostly so the graph below should be treated cautiously!

The funny thing is that I had noticed there was a relation at Google between employees and revenues, basically $1M per employee. Facebook looks slightly less efficient.

Silicon Valley has always been a war for talents. In the 90s, the electronics industry lost people to the Internet companies (you should remember that Yang and Filo, the founders of Yahoo! were studying in the field of electronic design automation) then Google was doing the same in the early 2000s, now it is about social networking. I would not worry too much for Google though. Not yet! As as Richard Newton was saying in EDA Cafe : “Silicon Valley and the Bay Area are cradles of innovation.” And he further added, stating a colleague of his: “The Bay Area is the Corporation. […When people change jobs here in the Bay Area], they’re actually just moving among the various divisions of the Bay Area Corporation.”

Israel (through Finland)

1 Reply

I spent 5 days in Finland in mid-October and I came back with interesting lessons. But before writing about these in my next post, I would like to come back on the Israel situation which interestingly enough has been a strong model for Finland. I had discovered the Victa report (you may see my older post) a few years ago and during my trip, Will Caldwell who had invited me to Helsinki offered me his book Attracting Foreign Investment into Early-Stage Finnish Technology Companies. An Examination of Different Investment Modes Including Case Study: Comparing High-Tech Investing Environments in Israel and Finland.

One of the strong features of the Israeli situation is how international their start-ups are. This includes international investors and also the fact that most start-ups have a US presence very early in their development. (They have fully digested the Go West I mentioned in my post of yesterday). And finally, the M&A and IPO ouputs are a by-product of all this. Will’s book was published in 1999 so it could look old, but it is not. Let me just show you a number of examples: one striking element which is not about Israel is a comparison of what entrepreneurs need and what local business angels (in Finland) can bring.

The discrepancy which appears was an argument for the need of international VCs. This may still be the case!

Now more about Israel. The country is known for its great success with high-tech start-ups and here is what Will was showing:
– Table 6: Israel had more start-ups on Nasdaq than Europe as a whole. One may claim Europe has local stock exchanges but it would not change the success measure.
– Table 5: The M&A activity mostly by US companies (of course). You could compare to my table about European M&As in my book.
– Appendix 4: the Mkt. Cap. Of all Israeli Nasdaq companies in 1998.

The results are obviously impressive but if you look closely at the volatilities, it also showed that the Israeli situation was diverse. Below, I just did an update of his tables.

One final table I steal from his book is a comparison of what entrepreneurs claimed in the business plans and what really happened. Not surprising but I had not seen it so often.

Now my updates of his tables: I looked at these public companies again. I used the Nasdaq web site and Wikipedia and then Yahoo and Google finance. So here are the updated values of the companies which were public at the time and the new public companies. I have not done stats yet, but the basic description of all this is good enough I think!

6 start-up lessons learned

1 Reply

A great document that I found thanks to Burton Lee. It summarizes perfectly what start-ups are about. It clearly shows how uncertain these things are: 0.1% home runs, .5% success at $100M level, young people, hungry, ready to change as fast as needed, so with the righ mental state, all this is just crazy and a little irrational. That’s why it is also beautiful. The movie about Zuckerberg (the topic of my previous post) describes very similar features by the way.