COS 333: Assignment for March 28, 2013

Fri Mar 22 09:02:38 EDT 2013

Many graduates of the Princeton Computer Science Department have gone on to use their technical skills to help start and run innovative new companies. This sometimes happens immediately after graduation (for example, Carter Cleveland '10, founder of Arsty), but, more typically, it occurs mid-career when experience levels and business acumen are higher. Notable among this group are Eric Schmidt '76, the Executive Chairman of Google and Jeff Bezos '86, the founder and CEO of Amazon.com.

Often a key ingredient in converting innovative technical skills to successful business ventures is the infusion of venture capital -- high risk money that provides the initial resources to hire people and pursue market opportunity. For our class March 28th we will step back from the day-to-day programming world and view things from a higher level, learning more about the world of venture capital. Our guest will be Peter Wendell '72, an experienced Silicon Valley-based venture capitalist with many ties to Princeton as a member of Princeton's Board of Trustees and as the former Chairman of the board of the Princeton University Investment Company ("Princo"), the organization responsible for managing Princeton's $17 billion endowment. Peter has also held a faculty appointment at Stanford Business School for more than 20 years where he co-teaches "Entrepreneurship and Venture Capital" with Eric Schmidt. See Peter's full bio.

As background for the March 28th class, Peter has sent along the the National Venture Capital Association's 2012 Annual Report. Since the report is quite long (120 pages), Peter suggests you just read pages 7-14, which will provide an "Executive Summary" of the venture capital industry's activities. You are welcome to look at the more detailed information in the rest of the report, but there is no assignment to do so, but do read pages 7-14.

For our class on March 28 Peter has suggested three assignment questions (see below). The first question should help you begin to think like a venture capitalist might think as he or she tries to decide which technology oriented ventures are most likely to be successful ... and therefore the best ones to fund. The second question is to help you think through what it would be like to be an entrepreneur and actually launch a new venture and what sort of help you might need. Finally, the third question begins to focus on the career planning aspects for those interested in someday starting a company. For many entrepreneurs, the concept of "career planning" is an oxymoron, but there may still be certain decisions and trade-offs that are worth weighing as you think about life after Princeton. In preparation for our March 28 class, all students should come to class ready to answer the following questions. There are no single "right" answers to these questions and the background reading is not provided because it contains the perfect answers. Rather, you should rely more on a combination of your own experiences to date, your instincts, anything you picked up in the reading plus any general knowledge you have, to answer the following questions:

1. Your wealthy but distant Aunt Ivy has died and left you $50,000,000 with the restriction that you may only have this money if you agree to invest it in early stage, private, high risk companies most or all of which will be technology-oriented. Auntie's will further specifies that to obtain the $50,000,000 and start your investment program all you must do is present her estate lawyer with a proposed list of criteria (listing the more important criteria higher on the list) that you would use in evaluating possible investment opportunities. Auntie's estate lawyer and her venture capitalist friend from Silicon Valley will meet you in class at 11:00 a.m. on March 28. Bring your list and be prepared to defend it. Bring a copy on paper to hand in at the beginning of class.

2. If you were a high tech entrepreneur starting a company, what type of help would you want from the venture capitalist who invested in your company? Please prepare a list in priority order. Bring a copy on paper to hand in at the beginning of class.

3. If you were a student at Princeton and you thought there was a good chance that sometime during your professional career you would be part of the founding team of a venture capital-backed, entrepreneurial company (perhaps even the president), how do you think you would manage your career? What type of jobs would you aspire to earlier in your career to help you achieve this goal? What type of further schooling, if any, would you seek?

Peter has agreed to make himself available after class for any students especially interested in the venture capital field that would like to join him for a quick sandwich.