Stan
MA0N0203
Lyndon MA0N0226
Overview
Founded by two brothers Bobby and Jeff Beaver in 1999
Online service that helps clients to upload images that can be
printed on various things.
 At that time, there was no dominant internet company servicing the
industry. The reason for this is that the industry was plagued by
antiquated technology.
The vision was to create a company that could print T-shirts one at
a time at an affordable price.
Overview
Their father was well connected to people in the Silicon Valley and
he helped his sons to assemble a team to face the technological
challenge .
It took them three years of hard work and they overcame their hurdle.
In 2003 the business was launched, and the company began to
receive many orders.
It hardly suffered losses and almost made a profit from the very
beginning.
Overview
After a year, the company was contacted by a venture capital firm.
This firm offered to invest US$16,000,000.
Advantages: Give them credibility.
The lead venture capitalists were early investors in
Google.
They could grow much quicker with the investment.
Overview
Disadvantages: Would be forced into a fast growth mode and would be
under pressure.
Give up a portion of the company that they have worked
hard for.
Result
They accepted the huge investment!!!
Discussion Questions
1. So what do you think? Do you think Kleiner Perkins and Sherpalo Ventures
made a wise decision investing US$16 million in Zazzle?
The amount of investment is very significant, and for them to believe that this
business venture would succeed , shows that they put their money where
there mouths are. So we would say that they made a wise decision to invest.
Three years from now, do you think that Zazzle will have disappointed or
dazzled its investors? Why?
Judging from their growth and partnerships that they have forged with big
companies, we think they will continue to dazzle its investors.
Discussion Questions
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?
Zazzle has a high leverage, a healthy balance sheet, strong cash flow
and good management.
The business idea is unique at that time with high growth and a niche
market.
Therefore they qualified for venture capital funding. We would say that
debt financing would be ideal.
Discussion Questions
3. Evaluate Jason Ball’s (the blogger’s) criticism of Kleiner Perkins’s investment
in Zazzle. Do you think Ball makes some good points or do you think his
arguments are off-base? Explain your answer.
The blogger’s comments are valid. An investment of that size for an internet
company is very risky. He mentioned “1999 all over again” that refers to the
“dot com” bubble which took place.
His comments are not “off-base” at all. He is just concerned about the huge
investment in such a young company. There is also greater risk, because it is
an internet company.
Discussion Questions
4. What do you think is Zazzle’s exit strategy? How will Kleiner Perkins and
Sherpalo Ventures recoup their investment?
When choosing an exit strategy, think about what sort of exit you want. If you
want to get rich while staying on at the company, a successful public offering
can be a good choice. If your goal is to walk away completely -- to raise your
kids, say, or to start a second career -- you may want to sell the business lock,
stock and barrel. When the time for an exit arrives, you should also re-evaluate
your plans based on the current economy.
Application Questions
1. One of the criticisms of Zazzle is that its service is almost identical to a
similar venture-backed company called Café Press’s
(www.cafepress.com) Web sites. What points of differentiation , if any, do
you see between Café Press and Zazzle?
The businesses are very similar and almost the same. Zazzle offers a
customer satisfaction policy and all the customer’s information is secure.
Whereas “café press” does not offer this.
Application Questions
4. Spend some time on Zazzle’s Web site creating a T-shirt. Did you find the site
to be easy to navigate and Zazzle’s product offering appealing? What is it that
you liked about the experience and what did you not like? Did your experience
influence your perception of the wisdom of Kleiner Perkins’s and Sherpalo’s
investment in Zazzle?
We found that the website is easy to navigate and its product offering is
appealing.
It’s the first time that we’ve tried something like this, there’s nothing that we didn’t
like about the experience.
It did have a significant influence, but it wouldn’t influence us like that of Perkins
and Sherpalo.
THANK YOU