Start Me Up or Not? Notes from a Garage Technology Ventures event

A lot of people are asking me about start up company information. I found while doing computer maintenance my old notes from a Garage Technology Ventures event in Mountain View, California, USA.

After having quickly read through the notes, I think (what do you think?) most of the information is still valid. So here's a summary;

Guy Kawasaki presenting;

Get Started

1. Make meaning

a. Increase quality of life

b. Prevent end of something good

c. Provide quality product & service

2. Make mantra

a. Everybody writes a mission statement - don't go there, make a simple statement with a meaning

b. Starbucks - "Rewarding Moments"

c. Nike - "Authentic, athletic experiences"

3. Get going

a. Start making product or service

b. Think big, 10x better, create the next curve

c. Find soul mates as working buddies

d. Think love/hate design

e. Design differently (I want it)

f. Previous employee does not see it; Start your own company

g. What the hell, let's build it

h. There must be a better way

4. Define a Business Model

a. Who has your money in their pockets?

i. Who is your customer?

ii. What do they want?

iii. How much will they pay?

b. Keep it simple

c. Copy somebody's already working business model

d. Ask women about your business model

5. Weave a MAT (Milestones, Assumptions, Tasks)

a. Milestones

i. MS1 - Proof of concept

ii. MS2 - Complete design spec

iii. MS3 - Finish prototype

iv. MS4 - Raise capital

v. MS5 - Ship prototype

vi. MS6 - Ship final

vii. MS7 - Break even

b. Assumptions (list and test real assumptions)

i. Test product

ii. Test market

iii. Test gross margin

iv. Test sales calls

v. Test sales cycle

vi. Test conversion rate

vii. Test payment cycle

viii. Test payments

ix. Test receivables

x. Test pricing

c. Tasks

i. List tasks for milestones

Bill Reichert presenting;

Raising VC funding

Key VC interests;

· Rapid sustainable growth

· Size & scale

· Disproportional profitability

1. Start smart

a. Corporation and stock issues, buyback agreement for founders stock

b. Employee considerations

c. IPR value, NDA

d. Seed investments including loans

e. Corporate governance practices

2. Tell a good story

a. Team

b. Problem & opportunity

c. Technology & solution

d. Sustainable advantages

e. Business model

f. Partnerships & leverage

3. Make the numbers add up - Demo solid grasp for your business

a. Long term financial projection (vision)

b. Near term operating plan (tactical)

c. Capital requirements

d. Capital structure over multiple rounds

e. Levers of profitability & key metrics

4. Find the right investors

a. Generate momentum

b. Target your venture contacts

c. Nurture syndicates (lead and others)

d. Manage selling process

5. Build your credibility

a. Customers

b. Strategic partners

c. Investors (seed)

d. Advisory and board members

e. Gurus and experts

f. Milestones

g. No lies

Bootstrapping

Four basic models
· Garage

· University (research grant, technology or government grant)

· Services to product

· Core customer & Partner (make sure you keep licensing rights to sell to other non-competitors)

Sustainable models
· Low capital requirements

· Low cost of customer acquisitions

· Rapid cash flow/Cash up front

· Recurring revenue

Nine alternatives to find bootstrapping sources
1) Day job (contract or employment)

2) Credit cards & mortgages

3) The 3Fs (friends, fools and family)

4) Founding angel (seed)

5) Government grants

6) Incubator

7) License rights (exclusive rights for 1 market)

8) Core Customer

9) Version 1.0 - Real customers buying your product

Bootstrap Economies - It's about payback, not ROI, therefore model payback on each expense
1) Product features

2) Marketing & Promotion

3) Sales expenses

4) Overhead

Bootstrap Product Development - Get to your product fast
1) Work nights & weekends

2) Use PhD students, dissertation projects

3) Tap offshore resources

4) Productize a consulting project as NRE (Non-Recurring Engineering) income

5) License a finished product

6) Import a finished product

Bootstrap Selling - Design in repeat sales
1) Rifleshot selling

2) Community (viral marketing)

3) Channel sales

4) OEM partnership/private label

5) Internet

6) Consulting

Bootstrap Marketing - Leverage the leader's marketing
1) Press releases

2) Events, seminars, webinars

3) Directories

4) Analysts

5) Affiliate marketing programs

6) Adwords

Bootstrap Recruiting - Focus on raw talent

1) Networking

2) University

3) Competitors

4) Contract recruiters

5) Not Monster

6) Nurture "talent in working"

Bootstrap Operations - Leverage ecosystem
1) Core: Product development, Sales, Customer support

2) Not Core: Coding, marketing, overhead, manufacturing

When do you stop Bootstrapping?

1) The VCs start to call

2) Product & market becomes hot

3) You can validate revenue projections

4) You can validate payback models

5) You can operate indefinitely at break even

6) You are profitable

7) Never

More on networking sites, Kaneva, Twinity, Spoke, Jigsaw,..

The social networking services are morphing with the virtual worlds from gaming. Two good examples are;

Kaneva a US based company in Atlanta where you can design your own world and mix it with facts and real people you network with. Try it out here. A German based counterpart exaple is Twinity which is in private beta right now by the Berlin based company, Metaversum.
I have only tried Kaneva so far, unfortunately, their business model seems to be based right away on paying for building up our virtual world.

AlwasOn Network is among other things a networking service. AO is mainly known in Silicon Valley for their extensive coverage of start-up companies, inventions, new technologies, Venture Capital coverage (including arranging briefings, conferences and seminars). Bigger events are often done jointly or sponsored by KPMG. Take a look at my profile and try out the services and good access to information and personal contacts you get from AO.

Spoke has transformed itself from being just another networking site into a serious business database resource of 40M+ business contacts. You can easily search (though site response is slow sometimes) for all levels of business people. After renewed use of Spoke recently, they can be viewed as a premium version of Jigsaw (more about Jigsaw later in this post). This service though comes at a premium price, $50/month for an invidual user. Well worth the price if you are a serious corporate marketing user.

SiliconIndia is a relatively new networking and information site in India that is still in beta and allows free access to all members. Good portal to access the booming Indian/Asian continent. Worth keeping an eye on.

WirelessFactors is a niche networking site mainly addressing wireless professionals. The site is still small though but with useful info for wireless.

Jigsaw is a more open (free option in addition to premium services) business contact service than Spoke. Jigsaw works like a tradingpost for business cards. Good contact database, though limited to about half a dozen countries, you can e.g. only access or trade contacts in UK for the EU countries. Jigsaw also gives you free access to Anagram, (register at Jigsaw and dowload from Jigsaw) a useful software tool for easy drag and drop of contact information into Jigsaw.

Staffingforce is an interesting networking site entirely focused on recruiting networks. Read before you do something about this site, George Vasu's blog, there you will get all you need to know before registering. See, http://vasutown.blogspot.com/ A very interesting approach to business building and social networking.

This is the networking update for now.

Happy reading,/Thomas