Tech Due Diligence in a Startup - Workshop

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Information about Tech Due Diligence in a Startup - Workshop

Published on October 14, 2016

Author: ChrisPhilipps

Source: slideshare.net

1. Tech Due Diligence from a CTO’s perspective - The Workshop Chris Philipps cphilipps@me.com powered by

2. Chris Philipps • Tech Advisor for Startups and VCs • Interim CTO since 2010 • Agile Enthusiast since 2008 • Tech since 2000

3. Chris Philipps • Tech Due Diligence since 2010 • Roles: • “CTO under DD” • Reviewer • Sparring partner for CEOs & CTOs (Test runs / DD support) • Performed dozens of DDs from 100k seed/angel up to 40M Series C round

4. What about you?

5. How it all began (or: /me in 2010) • dramatically unprepared • no clue what’s going on • we probably got the funding *despite* me, not because of me … and so are many CTOs in 2016

6. AGENDA • What is a DD - and what isn’t? • Different stages of funding • Investors’ expectations • Chris’ approach • DD-related documents • Typical red flags • Your skeletons in the closet • (War Stories: The good, the bad and the ugly) • Q&A

7. What is a DD (and what isn’t) • A DD is a general health check • Identification of assets and risks • Evaluation of • Leadership • Team • Technology http://www.amusingtime.com/images/09/funny-inspection-of-monkey.jpg

8. A DD is highly collaborative work • A first test for • common understanding • trust • dealing with conflict • BONUS: It is the most honest and thorough feedback you can get http://www.amusingtime.com/images/09/funny-inspection-of-monkey.jpg

9. It is NOT: * • hide-and-seek • us against them • a show * at least it shouldn’t be. Well, not entirely. http://www.amusingtime.com/images/09/funny-joker-monkey-picture.jpg

10. Different stages of funding http://awsassets.wwfmz.panda.org/img/original/rhinos_1.jpg

11. Different stages of funding Stage: Seed / Angel
 Biz Focus: Build DD Focus: Potential Stage: Series A,B,C Biz Focus: Fast, massive growth DD Focus: Scalability, ability to change quickly Stage: Series D
 Biz Focus: Expansion (e.g. merger) DD Focus: Maturity Stage: IPO ?

12. Different stages of funding Stage: Seed / Angel
 Biz Focus: Build DD Focus: Potential Stage: Series A,B,C Biz Focus: Fast, massive growth DD Focus: Scalability, ability to change quickly Stage: Series D
 Biz Focus: Expansion (e.g. merger) DD Focus: Maturity Stage: IPO ?

13. Investors’ Expectations • Ability to grow and scale • Ability to change • Leadership and team skills • Risk assessability https://shechive.files.wordpress.com/2015/12/kittens-doing-very-human- ish-things-15.jpg?quality=100&strip=info&w=600

14. • No standard for Startup Tech DD’s (yet) • Very different approaches http://www.amusingtime.com/images/09/funny-inspection-of-monkey.jpg

15. Chris’ DD Approach http://assets.worldwildlife.org/photos/1456/images/story_full_width/ White_Rhino_8.7.2012_Threats_HI_102787.jpg?1345545643

16. Chris’ DD Approach • It starts with the intro • It is not only about WHAT but also about HOW • Big picture and context • Gut feeling IS a valid indicator! https://shechive.files.wordpress.com/2015/12/kittens-doing-very-human- ish-things-15.jpg?quality=100&strip=info&w=600

17. Chris’ DD Approach Recap: Main questions • Is the company able to grow / scale? • Is the CTO (CPO) able to provide great leadership? • Is the team motivated and highly skilled? • Are they able to (fail and) learn quickly? • What are main complexity drivers? • What are major challenges and risks? https://shechive.files.wordpress.com/2015/12/kittens-doing-very-human- ish-things-15.jpg?quality=100&strip=info&w=600

18. Review Topics: • Company view

19. Review Topics: • Company view • Product

20. Review Topics: • Company view • Product • Technical leadership

21. Review Topics: • Company view • Product • Technical leadership • Development process

22. Review Topics: • Company view • Product • Technical leadership • Development process • Hosting

23. Review Topics: • Company view • Product • Technical leadership • Development process • Hosting • Deployment

24. Review Topics: • Company view • Product • Technical leadership • Development process • Hosting • Deployment • Software architecture

25. Review Topics: • Company view • Product • Technical leadership • Development process • Hosting • Deployment • Software architecture • Quality Assurance

26. Review Topics: • Company view • Product • Technical leadership • Development process • Hosting • Deployment • Software architecture • Quality Assurance • Stakeholder collaboration

27. Review Topics: • Company view • Product • Technical leadership • Development process • Hosting • Deployment • Software architecture • Quality Assurance • Stakeholder collaboration • Company culture and tech ecosystem

28. Optional Topics: • Data Analysis / Business Intelligence • Data Science / Machine Learning • R & D • Compliance: Data security, Privacy, etc. • Internal IT • Hiring • …

29. Involved People: CEO / founder(s) CTO Head of Engineering CPO Head of Product Product Owner(s) Scrum Master(s) Agile Coach Project Manager(s) Mobile Engineers Software Engineer(s) Operations Engineer DevOps QA Test Engineer(s) Security Engineer Data / BI team Selected stakeholders such as Customer Support, Marketing, Sales Internal IT DataScientist(s)

30. Involved People: CEO / founder(s) CTO Head of Engineering CPO Head of Product Product Owner(s) Scrum Master(s) Agile Coach Project Manager(s) Mobile Engineers Software Engineer(s) Operations Engineer DevOps QA Test Engineer(s) Security Engineer Data / BI team Selected stakeholders such as Customer Support, Marketing, Sales Internal IT DataScientist(s) https://cdn.meme.am/instances/53541325.jpg

31. Prepare your Team • Give them context • State importance of DD • Eliminate fear • Give clear guidelines regarding disclosure of information • “Challenges instead of problems”

32. Review Format: • 1:1 Interviews • Group Interviews (e.g. dev teams) • Standup or Planning Meetings • Whteboard discussions (e.g. architecture) • Documentation Review • Code Walks / Code Samples • Live samples (e.g. from CI or monitoring tools) • Actual usage of the product

33. Examples of Questions • What are your principal concerns with respect to the business? What keeps you awake at night? • Describe your software architecture incl. 3rd party components, technology stack, communication protocols • What is the highest risk in your tech landscape and how do you plan to tackle it? • Which changes would you apply to your current architecture if you had to scale from n (unique visitors / transactions / requests / …) to 2*n / 5 * n / 20 * n? • Can you explain the reasoning behind the choice of XY? Why didn’t you [make / buy] it? • Can you describe your role and responsibilities as CTO?

34. DD Documents • See “Checklist DD Docs” - Exercise http://www.pd4pic.com/images/collared-peccary-pig-gray-sleeping-sleep-animal.jpg

35. Typical Red Flags / Antipatterns • Lack of transparency and collaboration on the DD • Lack of tech strategy • Not knowing the business perspective • Lack of delegation • Not-invented-here (NIH) syndrome • Focus on problems rather than solutions • Underestimates hiring talent https://media.licdn.com/mpr/mpr/AAEAAQAAAAAAAAe-AAAAJDIyOGU4MGE2LWNmMmItNGYxMS04ZWRjLTUxMDIzMjExODQ3ZA.jpg

36. Typical Red Flags / Antipatterns Leadership (covered) Technology Product Data Process => Your turn! https://media.licdn.com/mpr/mpr/AAEAAQAAAAAAAAe-AAAAJDIyOGU4MGE2LWNmMmItNGYxMS04ZWRjLTUxMDIzMjExODQ3ZA.jpg

37. Your Skeletons in the Closet http://www.berliner-zeitung.de/image/ 1236966/2x1/940/470/991b35395e50d9775ce05607dd228984/vZ/ verrueckte-jobs-berufe-arbeit-arbeiten-ausgefallene-schraege-skurrile- ungewoehnliche--.jpg

38. Your Skeletons in the Closet • Relax: EVERYONE has them! • Adress them proactively • Provide a plan how to tackle them (problem awareness and problem solving skills are way more important than problems)

39. [ The Good, the Bad and the Ugly] http://www.gablescinema.com/media/filmassets/slides/ The_Good_the_Bad_and_the_Ugly_1.jpg

40. Q & A

41. Want to collaborate? => Looking for collaborators on Startup Tech DD framework / standard cphilipps@me.com

42. Thanks! Questions? cphilipps@me.com Xing: https://goo.gl/aLH26o LinkedIn: https://goo.gl/9mCUQX Twitter: @chphilipps

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