Presentation Transcript

1. Will the Company Disappoint or “dazzle” it’s Investors?
2. Group 4 Nguyen Lam ThanhTruc Louis Bohan TsatsralDorjsuren AmarzayaNasanjargal
3. Introduction Zazzle was founded by two brothers Bobby and Jeff Beaver in 1999. It is an online service that allows customers to upload images that can be printed on T-shirts, stamps, posters, cards, coffee mugs and a variety of other items. At that time, there was no dominant Internet company servicing the kind of business. Therefore, by searching on that website, users could choose images in library or create a digital images and place them on Zazzle. This service provides a marketplace for artists, freelance photographers, and photo hobbyists to sell their work.
4. Introduction In 2003, after 3 year of hard work and overcame the hurdle, the business was launched, and the company began to receive many orders. Zazzel's business model was very similar to Dell's. It doesn't has inventory costs, except for the disk spaces needed to store images and provide paper and ink. Customers had to pay by credit card before the order was shipped.
5. Introduction After a year, the company was contacted by a venture capital firm. The company offered to invest US$16,000,000. Pros Partnering with two prestigious venture capital firms would provide Zazzle tremendous credibility. Grow much more quickly with the investment. Build its infrastructure. Expanding the firm's brand. Larger returns are expected Cons Forced into a fast growth mode. Would be under pressure. Overhead gets bigger. Increasing scrutiny. Giving up of large part of company that they have worked hard for four years.
6. Question 1 So what do you think? Do you think Kleiner Perkins and Sherpalo Ventures made a wise decision investing $16 million in Zazzle? Three years from now, do you think that Zazzle will have disappointed or dazzled its investors? Why?
7. Answer 1 Wise decision (in spite of significant amount)/Dazzle its investors The Ventures probably thought that sales will quickly grow. They may also feel that Zazzle is a start point for the sale of customized on-demand products, and that t-shirts, stamps, and posters are only the start. On the con side, although Zazzle says that it has proprietary technology, it’s hard to believe that what they’re doing can’t be easily copied.
8. Question 2 Look at Table 10.2 in the chapter. At the time that “Zazzle” raised venture capital funding, to what extent did it resemble the ideal candidate for venture capital funding as stipulated by the materials in the table?
9. Answer 2 10.2 Matching a New Venture’s Characteristics with the Appropriate Form of Financing or Funding
10. Answer 2 It is not clear from the chart that Zazzle was a candidate for venture capital funding. Zazzle’s ability to print shirts and posters “on-demand” is unique, but the idea of printing logos and images on apparel products is hundreds of years old. It is not clear whether Zazzle will experience high growth and Zazzle market niche is also not clearly defined. Finally in regard to proven management, Zazzle’s lead entrepreneurs, Bobby and Jeff Beaver have no business experience. The beaver’s father, who is involved with the firm, is a serial entrepreneur, and apparently has substantial experience.
11. Question 3 Evaluate Jason Ball’s (the blogger’s) criticism of Kleiner Perkin’s investment in Zazzle. Do you think Ball makes some good points or do you think his argumets are off-base? Explain your answer.
12. Answer 3 Stages of investment Series Seed Product design, hire a few employees, launch first product $250k - $2million median Series A Product and Userbase known, create business model, increase distribution, expand into new markets. $3m - $7million median Examples: Uber, Instagram Series B Scaling the business (expansion) $7m to tens of millions Example: Angry Birds $40m Series C-Z Grow fast, go international, acquisitions Tens to hundreds of millions Note: Stages of investment are arbitrary
13. Answer 3 $16m is TOO MUCH $16m worthwhile Based on the median Series A investment being $3m - $7million, Ball is right, $16m is too much. $16m is appropriate for Series B, startup that already has a business model, already tested in market Low deficits in Series Seed period Zazzle’s proprietary silk screening process Lower cost of production Created the customized T-shirt niche market Potential to dominate this niche
14. Question 4 What do you think is Zazzle’s exit strategy? How will Kliener Perkins and Sherpalo Ventures recoup their investment?
15. Answer 4 Zazzle exit strategy KP and Sherpalo Recoup $ Hire more employees Target well-known intellectual property wholesalers, offer them additional royalty opportunity International expansion Acquire related printing companies Design Zazzle App for mobile devices Encourage Zazzle finding partners IPO Acquiring longterm contracts with media owners International expansion Acquire related printing companies http://blog.eladgil.com/2011/03/how-funding-rounds-differ-seed-series.html