1. 1
How to de-risk
entrepreneurial
ventures
Including an examination of Vivint Wireless, a startup ISP (supported by a larger
company) as a case study

2. 2
Luke Langford is the Chief Operating Officer of Vivint Wireless and the Director of Strategy for
Vivint.
He joined Vivint just after the Blackstone acquisition of Vivint closed at the end of 2012 with the
mandate to put an innovation process in place and identify new billion dollar business opportunities.
In 2013 he piloted Vivint’s entry into the internet service provider business and has been leading
Vivint Wireless since.
Prior to joining Vivint, Luke worked at Zynga doing product management and Innosight – Professor
Clayton Christensen’s consulting firm – helping Fortune 100 companies identify and pilot growth
businesses.
He has a BA in Chemistry from Harvard, where he graduated in 2007 with advanced standing. He
also holds an MBA from Harvard Business School, where he graduated in 2012 as a Baker Scholar.
Who am I?

3. 3
Who are you?

4. 4
• Risk and entrepreneurship
• A model for categorizing risk
• How to track and test risks
• How Vivint is doing this with our Wireless ISP division
• How I failed to do this in a previous entrepreneurial venture and why many entrepreneurs do this
poorly
• What else is on your minds?
What I plan on talking about today

5. 5
Are you:
a risk taker
or
a risk mitigator?

6. 6
A failure: Guaranteach

7. 7
Risk
Value
Value
Risk
Risk 1
Development of website
1
2
Risk 2
Develop different teaching
styles users will appreciate
3
Risk 3
Develop process for cost effectively
producing videos at scale
4
Risk 4
Customers will pay for
YouTube-like quality
5
Risk 5
Customers can be acquired through
online channels, scalably
6
Risk 6
Interface will be navigable,
appeal to target customers
4
Risk 4
Customers will pay for
YouTube-like quality
6
Risk 6
Interface will be navigable, appeal to
target customers
5
Risk 5
Customers can be acquired through online channels,
scalably
1
Risk 1
Development of website
3
Risk 3
Develop
process for
cost
effectively
producing
videos at
scale
2
Risk 2
Develop
different
teaching
styles
users will
appreciate
The Wrong Way to Tackle Risk:
Addressing risk as it occurs
The Right Way to Tackle Risk:
Identifying important risks early and
addressing them first
Deal-killer risk
Path-dependent
risk
Source: “Beating the Odds When You Launch a New Venture” by Matthew J. Eyring and Clark G. Gilbert, Harvard Business Review, May 2010
How you should think about risk

8. 8
Motion
Detectors
Remote
Access
Smoke
Detectors
Glass Break
Detectors Carbon
Monoxide
Detectors
Motion
Detectors
Lighting
Control
Smart
Thermostat
Automatic Door
Locks
Surveillance
Video Key Fob
Small
Appliance
Control Recessed
Door
Sensors
Solar panelsWireless internet
Vivint panel
Security Energy
management
Home
automation
Solar Wireless (internet)
Vivint mobile app
What Vivint does

9. 9
$2.0
$4.5
$9.9
$15.0
$20.7
$27.3
$34.3
$42.6
1999 2006 2007 2008 2009 2010 2011 2012 2013
0
10
20
30
40
50
RMR
$ in millions
Expansion into
Canada
2006
2010
2011
Company rebrands
itself as “Vivint”
Goldman Sachs
increases credit facility
to $440 million
Goldman Sachs
provides initial credit
facility ($75 million)
2000 - 2005
Todd
Pedersen
founded APX
Alarm
Dealer for ADT,
Monitronics, Security
Networks
2012
Vivint completes
its millionth install
Blackstone acquires
Vivint for 2.1B
2009
Company
launches energy
management
offering
Company launched
Home Automation
Services
Company launched
GoControl Panel
Vivint launches a
residential solar offering
2013
Vivint is named
to Forbes “Most
Promising
Companies” list
Equity
investment by
Goldman
Sachs, Jupiter
Partners, and
Peterson
Partners
Company opens
Research &
Development and
Innovation Center
Vivint history and milestones
Vivint soft launches
residential internet
offering, using
proprietary wireless
technology

10. 10
DSL Normal
Cable
Fast Cable Other
Wireless
Vivint
Wireless
Speed 1.5 – 40
Mbps
20-50 Mbps 100+ Mbps 5-15 Mbps 50 Mbps
Price per
month
$30 $40-60* $105+ $40-50 $55
Slowing at
peak times?
Less Lots Lots Lots Less
To grow Vivint, it needs an internet service to bundle
with its solar and home automation offerings

11. 11
What must be
true…?
(for this to work)

12. 12
Key learning this week, by assumption
Critical assumptions
Confidence
change this
week
Overall confi-
dence Learned this week
Cost to serve customer is less than $##.##month (incl. data, support,
maintenance of network, depreciation of equip, etc)
• Routers have been source of customer disconnects,
will re-examine whether we want to install them so
often
Customer creation cost averages: $### or lower • (no near learning this week)
One network cell can cover at least ### homes (network cell = # fiber
terminus, # macro hubs, ## microhubs, ### customers)
• We have met several vendors of GIS software who
believe they can help us automate validation of this
assumption on large scale
We can achieve a ##% take rate in neighborhoods we cover • (neighborhood recently deployed) met this criteria
Network equipment give reliable, fast service (at least ##Mbps at peak, high
uptime)
• Survey returned many small issues; these should be
solvable;
Weather will have minimal impact on service • (no new learning here)
Customers will be willing to pay $##/month for our service (40-50 Mbs) • RMR remains less than ##; should get higher once
we force more control on sales team
Customers will switch • (no new learning this week)
1 in # will agree to ong-term easement on home for our equipment in
exchange for $##/month off
• This continues to be relatively easy, though it can
be time consuming (takes a few days for people to
think about it
Competition will not be able to lower prices enough to convince consumers
to stop switching
• (no new learning this week)
We can work with municipalities and utilities and other scaling partners to get
rights for equipment to be placed in appropriate locations, and do so timely
• Met an additional utility that has a telecom division
to host sites like our fiber terminii and macrohubs
Period from mm/dd – mm/dd/yyyy

13. 13
That sounds easy…
so why don’t most
people do it?

14. 14
Cognitive dissonance is uncomfortable

15. 15
How you can do
better than most

16. 16
Test early, test often.
(the number of network engineers Vivint Wireless had for the first
six months after we had paying customers)
(this was too long, but better to have done it this way than to
have waited six months to test until we had a network engineer!)

17. 17
Don’t spend too much time on your model
After a certain point, your model only gets better because of what
you learn in the real world. So: limit your excel time