Students are expected to research the questions via any and all online resources. Please ensure you provide links to online sources in your references/appendix to provide proper attribution. Please submit an electronic copy via turnitin (uts online) and bring a hard copy to class in week 4. There are no page limits.

Students are expected to research the questions via any and all online resources. Please

ensure you provide links to online sources in your references/appendix to provide proper

attribution. Please submit an electronic copy via turnitin (uts online) and bring a hard copy

to class in week 4. There are no page limits.

Part 1 Whitepages (10%)

See attached story about Whitepages as an introduction. Answer the following questions.

  1. Describe how Whitepages changed its business to become successful today. What is

its current business model?

  1. Is Whitepages’ change in focus considered a pivot in keeping with the ‘Lean

Startup” model? Describe the Lean Startup model and include when/when pivots

occur in their approach.

  1. The owner, Alex Algard, used Whitepages’ money to pay back investors. Is this a

Management Buyout (MBO) or Leveraged Buyout (LBO)? Describe the different

financing techniques and note any similarities/differences.

  1. Identify all the risks in this financing approach.

Part 2 Instagram and financiers (10%)

Use and to answer the following questions.

  1. What was Instagram’s pivot? Describe the business before and after their pivot.

What was the name of the company before Instagram?

  1. Before the pivot, investors including Baseline Ventures and Andreessen Horowitz

participated in financing of a $500,000 seed round. How many investments and exits

has each group had? Can you identify any cultural differences between the two


  1. How did the owners of Instagram exit the business? Describe the decision variables

including pointing out the risks in this exit.

Part 3 Case study development (10%)

Pick a startup that has received two rounds of financing (with the last round in 2016) and is

still operating. Do not pick the same company as any of your friends that are also taking this

class. Prepare a 800-1,000 word case study that describes the business idea and links the

funding to realistic financial metrics. Fill in a lean canvas (see for the

company so you understand the company fully. Create a projected future financing plan

(estimates) tied to deliverables (metrics).

You can often find slides from startup pitches that have actual financial metrics (see but you can create your own for the actual startup if you can’t find actuals.

This part of the assignment tests your creativity and understanding of financial metrics and

their links to financing.

25733 First Assignment

Alex Algard Risked

Everything To Turn His

Struggling Firm,

Whitepages, Into A

Growing Tech Company

Every day thousands of consumers go to Under Armour’s

website and click “buy” on a T-shirt or a pair of running shoes,

transactions that total an estimated $500 million a year. To

those customers it may seem as if their transactions are

processed instantly. But in that half-second or less, Under

Armour, with the help of a Seattle-based tech company called

Whitepages, makes the decision whether to trust the consumer

and complete the sale.

Under Armour is just one of more than 2,000 businesses,

including Wells Fargo, Saks and American Airlines, that rely on

Whitepages’ subscription-based service, Whitepages Pro, to

assess millions of transactions each day. Is a buyer trying to

pass off a fraudulent credit card? Or using a prepaid phone card

and shipping to a Mail Boxes Etc., a red flag for fraud? As

businesses crank up their online sales–and consumers move to

mobile phones, which are tougher to connect to real addresses–

the database that Whitepages began building nearly 20 years

ago as a simple online phone directory has become increasingly


It has taken most of those 20 years for Alex Algard, Whitepages’

42-year-old founder and CEO, to transform what started as a

side hustle into a real business with $70 million in revenue last

25733 First Assignment

year. That transition required guts and a steadfast belief in the

business. In 2010 the company’s two biggest clients cut back, its

revenues plunged, and its investors decided they wanted out. “I

was dreading going to board meetings,” Algard says. “We were

fighting about whether to invest in the business. It was a very

painful process.” And there was no guarantee the business

would survive.

The son of a Swedish father and a Korean mother, Algard was

born in Stockholm, moved to Vancouver as a teenager and

studied economics and engineering at Stanford. During the dotcom

boom, he landed an internship with Morgan Stanley in

Silicon Valley. While there, in 1996, he had an idea for an online

directory and thought to call it after the soonto-

be-obsolete phone book. When he typed in the URL, he saw

a “coming soon” notice, so he contacted its owner and flew to

Los Angeles to negotiate the purchase, paying just $900.

After graduation Algard took a job as a junior analyst at

Goldman Sachs in New York, tinkering with the online phone

directory in his limited free time. In those days, before the

advent of open-source technology and cloud-based software,

building a database of phone numbers would have been

prohibitively expensive, so he wrote some code that pulled data

from American Business Information (now part of Infogroup)

in real time. It cost just $5,000 a year in licensing fees and

allowed users to search nationally rather than having to go state

by state.

Before long Algard’s hobby, which generated revenue by

displaying ads, was producing more income than his day job.

Eleven months into his career he stunned his colleagues and

bosses by quitting Goldman to pursue the dot-com dream.

(Some at the firm were further stunned when they mistyped his

25733 First Assignment

URL and found themselves on, then a porn


Whitepages quickly became a cash cow. Consumers could save

on directory-assistance charges by looking up numbers online,

and advertising followed. An early win came from deals that

rewarded generously for forwarding searches

for local businesses to and

The contracts produced $15 million a year by 2005, and those

results attracted investors.

In 2005 Technology Crossover Ventures (TCV) and Providence

Equity Partners invested $45 million for a minority stake.

Revenues continued to grow almost effortlessly, reaching $66

million in 2008. But online business models were changing,

Google was horning in on local business search, and the

company’s fortunes were tied to the contracts with Yellowpages

and Superpages. “We saw the writing on the wall,” says Max

Bardon, who served as Whitepages’ CEO during a period when

Algard stepped down to focus on a second fast-growing startup,

an online community for car enthusiasts. “We started building

our own business-search capability instead of outsourcing to

those guys.”

But the new model required better engineering and design, and

couldn’t match the easy revenue–and 99% profit margins–of

the business-search deals. When Yellowpages and Superpages

cut back, their payments dropped from $33 million in 2008 to

$7 million in 2010. “It felt like an asteroid had hit us,” says

Algard, who had by then returned as CEO and had to try to

calm his VC investors. “They put a lot of pressure on us to

magically go find profit. It really got to the point where I was

thinking we would end up suing each other.”

25733 First Assignment

By 2012 Algard saw two options: He could find a buyer for

Whitepages, or he could come up with some $80 million to buy

out the VCs himself. He chose the latter. While Whitepages had

cash on hand he could put toward a deal, he was still roughly

$30 million short. To bridge the gap, the company took out a

bank loan–and Algard pledged his family’s house, savings

accounts and other personal assets as collateral. “That’s a ballsy

move that I really respect,” says Whitney Bouck, chief operating

officer at HelloSign and a Whitepages board member. (“We’re

glad this worked out well for Alex and our investors,” said a

Providence Equity Partners spokesperson; TCV declined to


The deal left Algard with the task of turning Whitepages into a

sustainable business. Now fully engaged, he shifted the

company’s business model, culminating this year with turning

off the advertising on the consumer side–Whitepages’ primary

source of revenue–and switching to a subscription model. For a

monthly fee of up to $29.95, users can get details on anyone

they’re trying to find, including mobile numbers and

bankruptcy records. For business users, Algard created

Whitepages Pro. “It keeps our fraud rates low, which is really,

really important for our business,” says Matt Oppenheimer,

CEO of currency-transfer startup Remitly.

Algard’s early insight was to link people’s identities to their

mobile phones rather than to their landlines and to work the

data into an “identity graph” that ties together phone numbers,

addresses, e-mail addresses, social networking profiles and the

like. He has also spun off a division that uses the phone data to

identify mobile-phone spammers. Called Hiya, the spin-off has

deals with T-Mobile and Samsung.

Algard refused to say what impact he expects these changes to

have on revenue this year but did say he expects it to surpass