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