— Mark White of White & Lee LLP.
Mr. White will present a hypothetical company and situations that illustrate certain principles of law and business as it is normally conducted in the Valley. Situations presented will include (a) starting a company while employed, (b) selecting the corporate entity, (c) creation and protection of intellectual property, (d) capital structure and incentive compensation issues, (e) early stage financings and valuation issues, and (f) the structuring of strategic relationships and joint ventures.
Speaker One: Gary Price of Ireland, San Filippo & Co.
Mr. Price will focus on issues for early stage companies. Topics addressed will include: (a) when and how to select an accountant, (b) comparison of big "4" firms to smaller firms - and typical fee structure, (c) tax issues on "C", "S" and "LLC" corporations, (d) parameters on acceptable debt-equity ratios, (e) required tax permits and licenses, (f) establishing a relationship with a bank, (g) issues on selecting a fiscal year, (h) brief review of rules on IRAs, Keogh Plans and the like, (i) proper record keeping and tax preparation, and (h) what type of financial management control system, if any, should a company put in place - and when, (i) when should a company hire a book-keeper, controller and then CFO, and how to find these people, (j) what techniques can a company employ to reduce taxes - such as the use of FISCs and other entities, and (j) other topics Mr. Price typically handles for early-stage companies.
Speaker Two: Dan Morris of Morris & D'Angelo.
Mr. Morris will cover the following topics, which focus on accounting issues and financial needs for more mature private companies. These topics will include (a) how to set up the initial financial books and records of the Company, and how should record-keeping change as the Company matures, (b) what financial accounting software packages are available, and which are best for what kind of Company?, (c) comparison of cash to accrual basis accounting, and which is best and when in the life of the Company? (d) what is the difference between an "audit" and a "review", and when should a Company begin to audit its financials?, (e) when should a company expense costs associated with software development, and when should these costs be accrued?, (f) under accrual accounting, what is an appropriate revenue recognition policy for the license of software?, (g) to assure that the company remains eligible for "pooling of interests" treatment for potential acquisitions, what if anything, should it do early on with respect to its accounting practices?, and (h) any other topics that Mr. Morris typically handles for his more mature clients.
— Chris Kocher of the Product Management Group.
Mr. Kocher should review current revenue generation and business models that companies might adopt in order to compete. In particular, he will cover: (a) what models seem to work for internet, software publishing (application and tools companies), web service companies and computer hardware peripheral companies, (b) give examples of companies that have implemented well - and that have not, (c) how should models adapt and change over time - and how should the change be implemented, (d) is it possible to test a model before implementing it - to assure success, (e) what is the process of selecting a business model (for example, is there a different model for different constituencies of customers: ie. OEM vs. end-user customers), (f) specifically, does advertising/subscription-based models work on the internet?; what about predictions for e-commerce in 1998?, (g) must the model be coordinated with those models adopted by larger strategic partners?, (h) speak a little bit about current product-life cycles, time horizons for technology change in specific industries, and what is the mix of products that is typically seen in successful companies, and (i) what about "brand-name" marketing, when is it appropriate - how to choose a trademark and promote market recognition.
— Clay Jones of the High-Technology Banking Division of Comerica Bank.
Mr. Jones' presentation will generally focus on providing advice to startup technology companies on how to establish a line of credit with a commercial bank. Topics he will cover: (a) who are the most active commercial banks in the Valley working with technology startups (for example, Silicon Valley Bank, Comerica Bank, Bank of the West, etc.) and what is the difference between them, (b) how do commercial banks differ from lease finance companies and debt finance funds?, (c) what should the company consider when selecting its bank (ie. lending policies, connections to sources of equity financing, international banking network, other factors), (d) what about programs with the Small Business Administration, and what type of companies and how do they qualify for this type of financing?, (e) when will banks typically consider extending a line of credit to the company, what are bank policies on extending credit before equity funding is obtained, while products are under development - and generally before working capital can sustain operations?, (f) what are typical bank terms for lines of credit; standards on interest rates, the issuance of warrants, security, personal guarantees, and term of loans?, and (g) how does the company establish a relationship with the bank, and who does management contact in the bank?
— Peter Herz of 3ware, Inc.
Mr. Herz will speak about his experiences this past year in co-founding 3Ware, Inc. In particular, he will cover (a) how he transitioned from Siemens Nixdorf to 3Ware prior to joining 3Ware full-time; (b) how the early members of the founding team were identified and recruited, and what compensation arrangements were considered, (c) how the company defined its business and initial product, what competitive analysis was made, what business model the company has adopted (product differentiation vs. volume sales with cost savings to the consumer), (d) how the team has balanced technology development with the requirements of funding the business, (e) writing and receiving input on the Business Plan, how it has been used, what seems to be critical in the presentation on the company - and how the Business Plan works with oral presentations to potential investors and customers, (f) preparing for and participating in COMDEX - how to get into the booth of a corporate partner, how to present the company and its product, and who to target, (g) making the decision to initially self-fund the business vs immediately seeking venture capital - the tradeoffs and timing, (h) identifying VC firms to contact, getting introductions, the progression of early and later meetings, (i) how the company intends to close its first round of financing, valuation issues and working capital requirements - how to set the amount of funding sought and how to stage out financings to maximize company valuation, (j) how to juggle the catch-22 of getting in the initial large customer with procuring the financing to provide that customer with the assurance that the company will be a dependable supplier, and (k) issues that have arisen that the founding team did not expect - and how they were handled.
