Dropbox Case Study

1. List 3 “start-up” companies mentioned in the documentary, including the name, founders, industry, and their major products.

Atari

Founders: Nolan Bushnell

Industry: computers, arcade and home video games  

Major products: Pong and Atari 2600

Genentech

Founders: Herbert Boyer, Robert A. Swanson

Industry: Biotechnology

Major products: synthetic human insulin

Apple

Founders: Steve Jobs, Steve Wozniak, Ronald Wayne

Industry: computer software and hardware, and consumer electronics

Major products: Apple I, Apple II, Macintosh, Ipod, Iphone

1. Briefly describe the performance of companies you choose above, after they were funded by venture capital.

Atari

Atari started with the game Pong which was distributed for the first time in a bar in California. The issue with Atari was that it didn’t have the sufficient funds to manage its inventory and operations. The company couldn’t find the best way to distribute its product. Once VC started to fund the young Atari the solution for the distribution came from the VC investors. One of them was a big SEARS share holder which connected between Atari and SEARS.

Genentech

Genentech wasn’t a company with a healthy business approach; they didn’t know how to commercialize the potential. When asked by the VC to come up with an assessment of how much capital do they need – they calculated the venture when everything is home build. The VC solution was to outsource the risks which removed the a substantial amount of the capital needed to fund the venture. In addition, the VC helped Genentech to understand how to commercialize the invention.

Apple

Apple had a great innovative product but they were missing the management and the market to sell the product to. The market was very very young.  The VC company sent Mike Markkula to help mange the young Apple, to help market the product, the educate the market and to create the distribution channels. In addition, Mike Markkula wrote the business plan for Apple and became the president and the CEO of Apple.

1. List 3 venture capital firms mentioned in the documentary, including the name, founders, and industries of focus.

New Enterprise Associates  - 20:06

Founders: Richard Kramlich, Chuck Newhall, Frank Bonsal

Industry: Technology and Healthcare such as 3com, Houzz, Diapers.com and more

Kleiner Perkins - 21:00

Founders: Tom Perkins, Eugene Kleiner

Industry: IT such as Tandem Computers, Compaq, Amazon and more

Sequoia capital –29:54

Founders: Don Valentine

Industry: Technology companies such as Google, Oracle, PayPal, Youtube and more

1. Briefly describe the history of venture capital industry.

In Spring of 1957 (3:37) Arthur Rock, a young investment banker, encountered a letter from 8 engineers that want to leave Shockly semiconductors labs and to work for a different company. Arthur rock offered them to start their own company and he will find the funding for it. The regular funding sources weren’t ready to invest their capital in a startup company (which was very innovative in those days). Therefore, Rock had to find alternative sources of funding in the form of companies and private investors. Sherman Fairchild was such a private investor, who decided to invest $1.5 M in the new company, which later became Fairchild semiconductors. Fairchild semiconductors was the first company to be located in what will later be known as the Silicon Valley.

During that time a group of business men in SF started their own version of VC. They created a pool of money and gave entrepreneurs time to pitch the group with their ideas. This was a hobby and was never a full time job until Bill Draper and Pitch Johnson decided to make it a full partnership and created a VC company. They were actively looking for companies to invest. The idea of starting a pool of money that was built out of several investors was a great formula for the future.

5. List 3 key players in the venture capital industry nowadays, including the name, founders, industries of focus, assets under management (AUM). For each player, give an example on either a successful or failed case.