Geek's Startup Business Experiences 262
FreshGroundPepper writes "A few friends and I are in the process of starting up a new software company. (We are compiling our business plan now) With the vast amount of software/startup experience among the /. crowd, we were wondering what kind of potholes and advice our fellow geeks could lend in the way of generic do's and don'ts in the early stages of the game. I'm not looking for legal advice so much as just any gotchas that others have run into."
the 7P principle (Score:1)
propper
planning
prevents
piss
poor
performance
I like the KISS principal too
Keep
It
Simple,
Stupid
Social Responsibility (Score:1)
Do not defend the Status Quo.
Do not step on people.
Do show respect for your partners/employees' ideals/ideas.
Work hard.
Work harder.
Have some scotch.
Be careful whom you take money from.
A law firm (hourly basis) is better than a lawyer.
Unless you're a financial guru, let someone else handle your books, taxes, etc.. (*I* know, Doh!)
Profit and social responsibility are NOT mutually exclusive.
Have some more scotch.
Get it in writing (Score:1)
Get a really good attorney (Score:1)
Don't just pick one and go with them, interview several. Many attorneys will give you an initial consultation for free, and even if you blow a couple hundred on the initial consult to find you don't like the attorney, it's worth a couple hundred to know that one wasn't right for you.
No matter what you're doing you're going to run into legal difficulty at some point. It's good to be well informed on your own (read Legal Care for Your Software) but there's no substitute for a seasoned pro.
I found this out the hard way, only getting an attorney after things had gone all to hell with a lousy client.
Suppose you're writing a commercial shrinkwrap product. Hire an attorney to write the shrinkwrap license. Are you a consultant? Have your standard contract drafted. Ask about what you need to do to get your company properly incorporated, maybe in line for an IPO.
Make sure that you find a lawyer that's going to be happy dealing with a little company like your startup. Don't waste time dealing with someone who's just going to take all your money and not give a damn.
Business Plan site (Score:1)
Balance (Score:1)
Re:Look at Extreme Networks (Score:1)
Yes, finding clueless yet technically compentent people who have no life other than their job is very important. Working them mercilessly while enticing them onward with stock options that later turn out to be worthless is also a great path to finanical success. Then when they collaspe, drained of all energy, you can fire them and hire new clueless minons who have been taught that life is work and work is life.
Marketing!! (Score:1)
What compiler? (Score:2)
OPEN SOURCE ADVICE (Score:2)
at first glance, it may seem like your goal is to make money, preferably doing something you find satisfying and challenging. actually, this is just an illusion. although having a satisfying and challenging career and making money are the short term goals, these are just stepping stones to your ultimate rewards.
we all know, whether consciously or otherwise, that what you really want is to score a hot young piece of ass. the fact that you disguise your ultimate intentions with a question about a business startup suggests to me that this some sort of repressed issue with you. it's ok. we all want to score a hot young piece of ass.
i will say, you are on the right track. you need to make a lot of money. the more money you make, the more chicks you get. then you'll make more money... then you'll get more chicks... it's a beautiful snowball effect. once you start down that path, forever will it dominate your destiny. consume you it will.
uhmmm, what was i saying? oh yeah... chicks. so, you need to make some money first. i would recommend starting your own business. you may want to submit an "ask slashdot" question and get some advice about how to proceed. that makes sense... just watch out for the trolls.
thank you.
Recommendations: (Score:2)
Real life example: A VC wanted to invest in a certain company. They (the VC) valued the company, at the time, to be worth 30 million dollars. They wanted to give around 5 million for 51% of the company. However, here's the real kicker -- the company's ONLY public competitor was worth nearly TWO BILLION dollars, and had only gone public around 6 months previous. The private company itself, imo, had better fundamentals than the public one did, and thus probably would have been worth nearly as much, if not equal to or more than the already public one.
Let's assume the company had sold out -- the VC makes an immediate (non-liquid) profit of 10 million dollars. Once the company went public, the stock the VC paid $5 million for would suddenly be worth $1 billion. That's an excellent deal for the VC -- but a really crappy one for the company itself. That 51% the VC has is 51% the company (and it's founders) no longer has -- all for 5 million dollars.
Focus on yourself, not your competitors. If you focus on your competitors, that means you will always be working to be better than them. If you focus on YOU, you will always be working to be better than yourself.
Remember, high prices aren't what matter -- high margins are. Lower your costs, lower your prices by an equal amount -- your margins remain the same, and you're that much more competitive. Keep doing this, and if you can win... you will.
Which leads to the fourth thing -- learn how to manage the absurd. I don't mean fix. I don't mean manipulate. I mean "manage" -- as in "cope". There will ALWAYS be things out of your control. The only thing you can do is cope with them -- and if you follow rule #3, this can make or break you. Keep extra cash on hand for dry spells. Get all the credit you can. Know what your core market is, and what you can "give up" and remain a viable entity. Have plans, but don't necessarily stick to them, if a kink shows up. Be flexible, intelligent, thurough, and fast acting when necessary. It's better to cut off a gangrenous leg than it is to let the disease spread to the heart.
And here is the most important rule of them all:
Be passionate about what you're doing. Starting a successful company requires hours upon hours of work, and sacrifice after sacrifice. You WILL be underpaid. You WILL work long hours. For at least one person in the company, the company will become his/her life. If you're not ready for that, you're not ready to start a company.
Re:WWJD (Score:2)
cause that's what Brian Boitano'd do.
Re:Experienced Old Farts! (Score:2)
Management (uhg!) (Score:3)
It's pretty hard to RTFM when there isn't a FM.
Don't know if that helps, but I feel better now that I've vented a little bit.
Things to avoid... (Score:3)
With all the people under one roof, you run less of a risk of having situations get out of hand, and they can be resolved quicker.
At a startup, everyone has work hard and be good at what they do; your personnel resources will be stretched so thin that everyone has to be the best at what they do in order to get things done.
Linking your download page through them is a waste of time. It makes your software that much harder to download, and when you try to release a new version, you have to wait for them to update your links. If you want to know how many people download your software, audit your ftp logs.
There are other considerations, of course, and some of these may not even apply to you. But I hope that's enough to get you started. Good luck with your venture!
Regards,
Aryeh
You should... (Score:4)
...ask for advice from random chuckleheads on the net. You can check that box off now.
Thoughts... (Score:1)
Remember that the business plan is nothing more than a roadmap of where you -want- to go. It's a living document that should be consulted and revised from time to time. Try to keep it current; if you have to, set aside a day every once and a while to review it. Check to see if you are on track, have your plans changed, has the market changed, etc.
If you're in the US, keep this URI under your pillow:
http://www.score.org
SCORE is the Service Corps Of Retiered Executives. They give free business advice to any US based business. They have local offices across the US, as well as email consultation. I've only used the email version, but the people there were -very- helpful.
Most importantly, know how much risk you can take. If it's a sinking ship..step back and decide if it's still worth continuing.
The best thing you can do is fail the first time. This may not sound good, but the next time you run a business you'll know what failure is like and be more careful. Especially when it comes to VCs and they have to put their money into your company. If you've failed and started again it shows that you won't give up easily and, hopefully, you've learned something along the way.
It'll help inject a dose of reality into the situation as well.
Anyway, that's my take on it..from personal experience.
Wayne
Re:You should... (Score:1)
As stupid as it sounds.... (Score:4)
For instance, at Carnegie Mellon, there's this seminar series going on right now that has people who graduated from CMU and talk to people about how to start your own business. I went to one such talk from a guy (sorry, forgot his name) that founded a biomedical engineering firm, and is now starting up a
That's besides the point, but his lecture had some great tips. Here's a few that I can remember (this was almost a year ago, so bear with me):
That's all I can think of right now... there's a lot to do to start up a business. And even if we all hate them, business people are the right people for the job to get your business going before it gets out of hand. Remember, while a geek may be able to code up his app, being able to juggle licensing and coding is a big responsibility.
Re:Take it from one who knows... don't buy cheap (Score:2)
Every time I have bought something for the reason that it was cheap, I have regretted it. Got a $100 fax machine from CostCo: unreliable and I lose important faxes. Needed an el-cheapo desktop: wound up DOA and took longer than a quality system would take to be built and shipped. Cared about price in office space: wound up with an unresponsive landlord, no hot water and old carpeting.
(That said, the only cheap thing that I bought which I haven't regretted: the Bizfon 680 phone system [bizfon.com], a really great little self-contained PBX for small business. It's awesome!)
Just Another Sucker On The Vine (Score:2)
I was involved with a computer repair shop that wanted to start up an internet service provider for nonprofit organisations. We had a storefront people could find us at, we had a good reputation in the community, we had a founder who was exceptional at applying for grants and 501c3 nonprofit status. However, at the moment the whole thing appears to have withered, and I myself left half a year ago.
Here's what happened, what I learned, what to do.
Use your talents, and try to avoid turning away from them towards more generic 'popular' ideas.
You need to distinguish, and if that means some customer doesn't like you, you'd better accept that rather than casting yourself into ever-new forms to please everybody you meet. I wrote a special version of site compiling software based on my Airwindows.com [airwindows.com] engine, trying to integrate people's amateur HTML into a 'more professional' three-column tablebased layout. This was discarded because customers (still about 4 customers, even now, and the one complaining left and isn't a customer anymore) insisted on uploading their pages completely unaltered, and _not_ built into a more sophisticated layout. I'll let them have some hits too, so they can use that as an argument for hopefully winning more clients- I was with Co-opnet.org [co-opnet.org]. By this point all traces of my work have been removed, except that I did much copywriting on the main page, and a fair amount of this writing remains.
Outperform- but be damn aware of the context you're doing it in.
You need to be able to absolutely burn rubber, to totally cut any competition to shreds. For instance, I figure I can cut most web designers, as I do sorta Perl-active-site type things with custom programs written in REALbasic- I can maintain a large elaborate site and do redesigns and have the software handle crosslinks and details like filesizes and image dimensions. In sound recording, I'm even cockier :) Now, with the putative ISP for co-opnet (AFAIK still hosted off the very capable Vservers virtual servers company), there were also elaborate plans for an internet cafe to co-locate with the ISP servers. There were questions of location, of bandwidth and getting a pipe- while the other Co-opnet people kept the computer repair shop running (a demanding task), I ran about coming up with answers for these questions. I got to the point of actually entering negotiations for a storefront property in town at 2/3 of the going rate (because I knew the landlords personally and also knew the previous tenant and got figures on what he was paying) and basically came in with a bid that would have cost one third or less of the property originally being looked at, plus the previous store's customers were a similar demographic to internet cafe customers... at which point, again, the rules began quietly changing under me, and I got the impression we'd already put money down (without my even hearing about it, and I was on the damn board of directors- may _still_ be) on a basement room just big enough for servers that happens to have a fibre optic link capable of T1. (co-opnet's site currently boasts just over 1000 hits total). Clearly DSL would be more suitable, but what concerned me more was that I was putting myself out there, actually trying to make deals on behalf of co-opnet, and getting second-guessed and undercut- the internet cafe part of the idea quietly dried up and blew away while I was shopping for properties and figuring out what kind of store layout would bring people in and where to get the machines. This, plus I'd agreed to be the main sysadmin, put down $300 of my own money on O'Reilly books and was trying to armwrestle other co-opnet people to not commit to Vservers 'check here to get our special search engine, check here to give all your clients secure web Email' features that'd kill me to get all of them implemented singlehandedly on top of setting up a webserver on a dedicated machine for the first time- and though I'd made it clear that I wasn't going to be able to do all this myself, nobody else ever got added to the roster to cover this.
I bailed, obviously. Stress was freaking me out, I was beginning to get physically sick and nothing was being resolved. So, back to the moral of the story- outperform, but know the context. It wasn't going to help that I could wear many hats and do many things- I wasn't capable of doing what would need to be done. The context was that I was wasting my effort attempting to deliver on the things we'd originally written into the feature list.
Don't be afraid!
Every time you try something it's an opportunity to learn. The founder of co-opnet would boast that he'd had 18 businesses, 14 of them successful(I may be misremembering the numbers a bit). Now, one could well ask, "If they were so successful why aren't you still doing them?" but there's one key point about this- you learn by doing. Investors and smart businesspeople would rather deal with a startup run by people who have _had_ a total failure- at least this makes it possible for the people to learn from their mistakes! Maybe to learn is not a sure thing, but it's better than nothing, and better odds than dealing with people who've either never tried, or have never failed.
Business is a process because _life_ is a process. You're not laying plans for the only thing you'll ever do for the rest of your life- you're laying plans for what you hope to be doing next month or next year. If that works out well enough that you do it your whole life, well then- did you remember to ask yourself, "Is this the way I want to live my life?" Because if you _must_ arrange things so that you can't fail, you might end up hosing yourself, ruining it for yourself. In a way, that's what happened to co-opnet... it was never okay to momentarily fail. If a customer was fussing about some web page thing, it wasn't "Perhaps you'd be better off with something like Geocities", it was panic and overhaul the whole concept of the website. If it was looking too hard to get the internet cafe going and there wasn't enough people or money to do the work, it wasn't 'commit to it more, make it happen', it was quietly lose faith and scrap the concept, go with less exciting, safer ideas.
I'm currently in debt for a year trying to start up a recording studio, building all sorts of equipment toward that end, and I'm happier because though my horizons are more limited (I'm hardly going and shopping for storefront properties! That was kinda fun), it's up to me to pursue them. So figure out what you want to do, and pursue that! Don't be afraid of failure. It happens to everybody, especially if you haven't fallen on your face much.
The most important thing is to learn, and keep learning. Any geek-type slashdot-reader linux-fetishing person is a lot more likely to be committed to this (who runs Linux without having to learn? I'm not sure that's possible). Hence, rejoice- you are probably the sort of person who _should_ be starting a business and doing that sort of thing. Enjoy it :)
Wrong. A good business plan is essential. (Score:2)
As for product ideas, the key is the Unique Selling Proposition. Why should people buy your product? What makes it special (better) than any other product out there? Also keep in mind that your product does not only have to please the customer, but also everyone else involved - vendors, people who will have to maintain the product (sysadmins) etc. If a sysadmin for some reason does not like the product (possibly because it is a good idea that he did not come up with - the "Not Invented Here" syndrome) for some reason, he may be powerful enough to block it, even though people would like to use it.
Of course a business plan includes more than that - most large banks have guidelines for writing a business plan - do use them!
Re:Management (uhg!) (Score:2)
There are many different styles of GOOD leaders.
There was a general leading his troops across the desert. One day the troops dutifully brought him the last helmet full of water. The general poured it on the ground saying "If my troops don't drink I don't drink." While this sounds good, and it makes you popular, it isn't the best style. (But if it is your style there is nothing big wrong with it) The problem is when you need to make hard decisions. You lose popularity, and this leader works best on popularity.
Then there is the slave driver. I mean the old fashoned kind that was not afraid to use the whip, and I'm not talking metaphoricly. This leader has no respect, but he gets the work done. He probably gets it done the fastest too, speed of work is all he really has to work on, and so you work fast to avoid the whip. Fortunatly modern laws have eliminated this guy. Lets pray it stays that way.
Next look at the big shot in his fancy office. He may be a great leader, but you don't see him. You hear (through the chain of commmand) his orders, and you obey. He gets all the fancy stuff. Despite this remoteness he inspires loyality if he is good. And you have only his decision to judge him on, so if he is a good decision maker you think well of him. Unfortunatly this is the hardest to do well. (IMHO) This guy lives on the power he has, and dies on it. Because he is remote it doesn't take many bad decisions before he either has to leave or step up enforcement of his decisions. (kings do the latter, in a modern company the board votes him out much faster)
There is the cheerleader. This person doesn't really make decisions, but can be an efficeive leader in some situations. I don't know much mroe about it though, I've only heard it exists.
There are two important things that a leader needs to do: make decisions, and enforce them. The leader can change his mind. The leader can (except for the slave driver should) listen to underlings. In the end though, the leader needs to enforce his decisions in whatever way needed.
I have known bad leader who were liked, and bad leaders who were hated. I've known good leaders who were liked and good leader who were hated. The part that makes them good is making the right decision quickly (often without enough information, but they are allowed to change their mind - though a leader who changes his mind too often is making bad decisions), then following up on it. I hate the latter part, when I'm leading good people who do what I tell them to do I like leading when they don't do what I tell them to, or are lazy about it I hate leading. That isn't to say I force them to do stupid things, I like the smart person who will tell me I've made the wrong decision, or can change midstream to a more improtant task if an emergency pops up.
Leaders cannot associate with underlings too much. You can be distant friends, play in the same band socially. But if you get too close you start to fell personal when you have to make hard decisions involving them. (do they get a cost of living raise and a big raise to the new guy who is very sharp, or split the limited money for saleries between them. How can you give a friend trying to raise 3 kids and pay for the house a small raise when you know his fininacial problems?)
There are many different styles of leadership that work. Some give you more respect then others. Pick one that works for you, but beware, if you are the dump the water out if there isn't enough, then you can never buy a yacht even though your company needs one to take clients on. The gold plated limo leader can't pour the water on the ground though either.
One last thought: I once worked for a person who was a good leader, but she saw a gap above her, filled that, and it turne dout to take all her time. She ended up not leading well because this one area consumed her time, but didn't have the power to deligate it to others either. She is gone now because of that. Make sure your leaders know their number one job and they don't forget that.
Management ios key (Score:3)
Its been said that more buisnesses fail due to bad management then all other reasons combined. This is true, so get good management. Techies who are barely compitent can get the job done if management recignises their weakness and plans for it. (note that I'm not suggesting you get less then the best techs)
Watch the cash flow. Every month get a summery of all the money you have, and how much you spent. Get it noterized as correct every three months. (a previous poster mentioned that bogus books were showed to him - make sure you have a good case for a law suit if the books are bogus) Don't take anyone's word for how well you are doing. Bad management will show up in cash flow first so know what the bottom line is. After a few months you should get a feel for how much you normally spend. Once you have a general idea figgure out if you have enough money to make it to release.
My dad got involved in a spin off with 15 others, and a product that was pulling in 15 million/year and would for the next 5 years. They looked at the cash flow one month and decided to send my dad out as a contractor for a week. They needed cash flow now, and even though they would get 15 million this year, money in july (or whenever) doesn't pay the bills until then. They had to make a choice when doing this, and it means that their next version will be a couple weeks latter, but at least they won't go belly up with lots of money coming in latter. (Fortunatly the manager that arranged that spin off "quit for personal reasons" a few months latter - I own stock in and work for the parent company I was not happy about losing that income stream)
BTW, you have heard that 50% of all buisness fail in the first year. I just read in the news paper (but I can't remember which one, so you should research this or call it hear-say) that 85% of startups make it.
Good luck.
Re:It's the cash-flow stupid ... (Score:1)
Big second to this. One of the biggest problems small companies have with growing is cash flow, particularly if you don't start out with a bunch of dough and have it in the bank.
Scenario: You get a $50K contract to build a web app. Excellent! You ask for 30% up front: 16K or so in the bank.
Now, since this is a relatively complicated application, it's going to take three-four months (with milestone meetings, revisions, documentation, etc) to develop. And because you've only got two or three programmers, this project basically ties them up completely, *plus* it takes 20% of the time of the project manager. So that $15K has to cover not only the one programmer but also his/her overhead and the project manager's time. Ouch.
The worst is that people never pay their bills on time. You might get the rest of that contract money 3 months (!) after you've completed the work because their accounting department is full of idiot monkeys. How do you pay your employees (plus bandwidth, rent, heat, taxes, etc.) in the meantime?
How to get around it? Try to tie payments to milestones. Set four or five milestones throughout the project, get a 15-20% down payment and have 20 - 25% of the contract due at each milestone. This has three extra benefits: 1) customers generally like not layout out lots of money at once -- they also like to see performance tied to the money they give you; 2) keeps *you* on schedule (hopefully); 3) gets them move involved *during* the process, when it's easier to fix bugs, rather than dumping all their problems on you at the end, when it's more difficult.
Re:Incorporating? Where? (Score:1)
I was wondering what the experiences anyone else here has in that. I know that to get a nevada corp there are registered agents who are happy to take $75 a month to forward mail sent to your company. He claims taxes are best in Nevada too.
He credits the Mafia for bringing such buisness friendly legistation to the state.
Now the only thing that keeps me from this plan is that the people following it are selling things like plastic balls that will keep your clothes clean for 70 washes and stuff like that.
Is there some way to run a company so that it is more difficult to "pierce the corporate vail" without resorting to such shoddy measures? Are there some rules I should follow that avoid loopholes that lawyers might use to get at my possesions?
^~~^~^^~~^~^~^~^^~^^~^~^~~^^^~^^~~^~
Liability Concerns (Score:1)
My friend is really pounding the importance of a Nevada Corp. Basicaly his point is that even if you have a company, set up in limited liability (as in they can only get the assets of the company and not your personal posessions if they sue you and win) they can pierce that "corporate vail" and get to your own posessions.
I was wondering what experiences anyone else here has in that. I know that to get a nevada corp there are registered agents who are happy to take $75 a month to forward mail sent to your company. He claims taxes are best in Nevada too.
He credits the Mafia for bringing such buisness friendly legistation to the state.
Now the only thing that keeps me from this plan is that the people following it are selling things like plastic balls that will keep your clothes clean for 70 washes and stuff like that.
Is there some way to run a company so that it is more difficult to "pierce the corporate vail" without resorting to such shoddy measures? Are there some rules I should follow that avoid loopholes that lawyers might use to get at my possesions?
^~~^~^^~~^~^~^~^^~^^~^~^~~^^^~^^~~^~
Re:Related question (Score:1)
What makes you think anyone would want to buy it?
Are there any helpful sites out there? (Score:1)
Would appreciate if someone could give pointers to sites/books which provide the details.
Thanks
Re:Several pieces of advice (Score:2)
- Jeff A. Campbell
- VelociNews (http://www.velocinews.com [velocinews.com])
Practice thrift (Score:1)
The biggest threat to a small business's success is under-capitalization. That means you need cash, and you need plenty of it.
Your first line of investment needs to come from friends, family, ex-lovers, and your dog groomer's rich, eccentric uncle. Don't touch VCs until that money looks to be running out. VCs will want a part of your company, and they will get it, or you'll get no money.
You will give part of your business away eventually, but don't start giving it away too soon. Keep control as long as you can.
Be intellectually honest with yourself. If your product does X, make sure it does X to the best of it's ability, and in a way that solves your target audience's problems fully. Sounds dumb, but it's an important distiction. For example, Excel is a pretty good spreadsheet, and can be used by almost everybody -- but NOT before they take a 3 month class, or read a mind-numbingly dull "How to be an unleashed Excel dummy in 21 days" book.
Keep in mind that your audience is not you. They aren't hackers. Unless your product is hacker-oriented, of course. Get somebody who can do interaction design to make sure that your users aren't lost or overwhelmed.
Above all, have fun and learn something. Do a little cross-training. If you're design, learn some coding. If you're a coder, learn some design. Don't get pigeon-holed into a single task. Because, most likely (according to statistics), you'll go down in flames. If you take that time to learn new things, it makes you're company stronger, less likely to implode under internal pressures, and makes you more hirable if it does go splat.
Re:Don't hire some east coast banker to be your CE (Score:2)
-jwb
Re:Get things on paper (Score:2)
-jwb
Don't hire some east coast banker to be your CEO (Score:4)
Rule #1: Don't Sell Out
That doesn't sound very hard, but it is. You have a great idea today. You have ideals and standards. Soon, the pressure to make money will test your morals. Maybe you could IPO bigger and sooner if you hired some banker fuckbag to be your CEO, and if you let him hire his gang of hangers-on to be your executive management team. Maybe you could make extra money by selling your customers' private information. Maybe engineering is too expensive and you should just outsource the whole thing to Andersen Consulting or whoever.
The love of money will make you abandon all of your now-lofty ideals. Stick to your moral guns and you will be much happier and, eventually, more successful. History might even remember you. You may have to wait a few years or even decades before success hits. That's the price of happiness.
-jwb
Be careful! (Score:1)
Keep your emotions out of all interactions with partners. Be purely logical. Screaming matches will lead to destruction.
Dream big, but don't forget the details!
Be prepared to work very VERY hard! But be on the lookout for signs of burnout! Delegate anything you can. If you bite off more than you get chew, get help before you go down in flames!
Be happy that there is a Lord of the Rings movie trilogy in the works! [bloomnet.com]
Do something else first. (Score:1)
Before you start your own buisness, go out and work in the real world for a while. It is very educational to go work for someone else's startup and see how they do things and what they do right and wrong.
Someone recently asked Brian Hook, a well known name in the game world, whether he wanted to start his own development firm. He said absolutley, but that he needed more experience before he jumped into it. I totally agree.
Some day I will revisit that startup idea I had right after college, when I have more experience. Then I will have connections throught the industry, an understanding of Venture Capital, and knowledge about how to run a buisness.
--Tom
First and Foremost (Score:3)
With those in hand, you'll be much more prepared to organize a software project that achieves its goals on-time and on-budget, has the functionality needed by its end users, and is maintainable over the long term.
He bases his writing on hard fact: innumerable studies have been done that indicate what works and what doesn't in the programming and in managing programmers. Learn from the mistakes others have made before you!
And I suppose I'd best disclaim that it would be utterly foolish to dismiss these books out-of-hand simply because they are printed by Microsoft Press. I caution against being a simple-minded naysayer; if the books are no good, prove it by reading them.
('cause they'll influence you for the better, regardless what you think!)
--
Duh.... (Score:1)
I didn't read the article very carefully, I just saw "Startup...blah blah...something....game" Aha, its a game company.
Darn, I wish Slashdot allowed people do delete their own posts within the first minutes. *blush*
************************************************ ***
Re:You want Gamasutra (Score:1)
Yeah, now I'm glad I couldn't remove my first post. It's the most karma I have ever earned.
************************************************ ***
You want Gamasutra (Score:3)
Some current articles:
Postmortem: Zombie's SpecOps: Rangers Lead the Way [gamasutra.com] by Wyeth Ridgway [02.01.00] This third-person combat sim had to deliver up to 10,000 polygons per frame at real-time frame rates all while upholding rigorous standards of realism. Lead programmer Wyeth Ridgway discusses the features of the Viper engine created for SpecOps as well as what went right and wrong in development.
Optimizations Corner: An Optimized Matrix Library in C++ [gamasutra.com] by Haim Barad [01.31.00] In this installment of the Optimizations Corner, Haim Barad discusses a better way to manipulate vectors and matrices using Intel's Streaming SIMD Extensions. In this article they present a set of optimized matrix routines that take advantage of SIMD architectural enhancements done to recent microprocessors which are a perfect fit for matrix and vector operations.
Artistic License: Acquiring, Managing and Dealing with Licenses (and Making Them Profitable) [gamasutra.com] by Elizabeth J. Braswell [01.25.00] So you're thinking about trying the Sure Thing: to go after a popular character, TV show, book or movie, get the license, spend a little, make a million. There's just one catch - it isn't that easy. Elizabeth J. Braswell discusses the stickier details of acquiring a license, working with the licensor, creating an innovative product which will appeal to fans and even sublicensing - creatively making more than you expected.
Planning and Directing Motion Capture for Games [gamasutra.com] by Melianthe Kines [01.19.00] Motion capture is a great tool for creating animation for certain types of games. Like any tool or piece of software, if you learn how to use it properly, it can make your life easier and produce great results, but if you try to wing it, chances are you'll end up wasting time and money and may come away with nothing useful. Melianthe Kines discusses motion capture in depth.
************************************************ ***
Have clear, articulated, attainable goals. (Score:1)
One problem the startup I am involved in now has is that our original goals were vague. This situation left the investors, management, and development all with different ideas about exactly what it was we were trying to bring to market. Now, we are attempting to address that by describing clearly what products we want to develop, but it's a mess, since everyone has their own baby.
It sounds trite, but unless you know exactly what your goal is, you will never know when you are doing the right things to bring it to fruition.
An example, don't say you are going to develop "Internet based software for the medical industry". That's way too vague, and a much bigger elephant than anyone can eat. Instead say you are going to develop "a physician continuing education portal where Doctors may take online classes for continuing education credits".
The last thing you want are those expensive developers sitting around twiddling their thumbs because they don't know what it is they are supposed to be creating. Marketing people tend to be sales based, and they will promise potential clients anything, regardless of if it has anything to do with what your original plan was. For example, we are developing internet based software, but our sales people have actually promised potential customers that we would write them Windows 98 apps that run on an Access database. We the developers have had to veto that kind of thing many times.
In other words, find your precise niche, and don't let yourself become distracted from it. The easiest way to miss your target is to not know what it is.
Sorry for the rant, living with this situation is making me bitter... ;)
Some guy named Chris
Deirdre's Rule of Management (Score:1)
single other cause, bad managers drive away good people. I have had two bad managers in the last year alone. In one case, I survived but the manager didn't; in the latter case (at the same company), the bad manager survived.
In no case can you afford a bad manager. Because information to other managers is filtered by the bad manager, it all seems rational at the time.
Another thing I learned in Finance...by all means, TAKE microeconomics, business law and corporate finance! I have used my business law class more than any single other subject I took in college. Getting back to finance, the long-term assets make or break the company. Enter into those very carefully.
Cash flow, or liquidity management, is crucial for short-term survival. Long-term asset management is crucial for long-term survival.
Getting back to the point, I predict that said manager's future downfall at The Firm (all hail the firm) will be the abysmal choices in the capital budget...the same mistakes he'd made in the past at another company.
_Deirdre
Funding (Score:1)
This gives me a few advantages:
1. MONEY, consulting pays well, and if you are a good eveloper willing to travel $50/hr is just the start.
2. Knowledge of the systems and processes which I will be providing services to. You get to see first hand what types of problems exists out there, and how you will solve them.
3. Experience! (do I have to explain this one?)
My 2 cents.
Compiling a Business Plan. (Score:3)
Re:Incorporating? Where? (Score:1)
LEAD!! (Score:1)
My last project was bought by another company and it was something I actually pushed for. The guys I co-founded the company with were cool, but they just lacked a strong vision and a strong leadership presence. The new company that bought us just racked these guys cause they could not stand up for what they wanted. I got a great salary and got to work with some great people, but because the new people were also a bunch of boneheads, I ended up butting heads with. They were so removed from their employees (the king and queen syndrome) and they never gave the employees the credit and praise they deserved. So we're all leaving with less than we could have.
Now, I won't take anyone's shit and I will see my vision to the end (whatever that end may be). It takes a good leader to keep everyone focused and in line. If everyone is making decisions or people are not making good decions because they lack the vision, then it's time to leave or overthrow the leadership (which is probably not an option as I learned the hard way).
There's a reason Apple is doing so well now and while Jobs may be a gnarly guy to work with, he has the vision and leadership to take the company forward. Investors look for this.
Avoid overpromising new clients (Score:1)
MAKE BACKUPS! (Score:4)
A start-up that I'm involved with was already in the process of meeting with Vulture Capitalists, and I get a panicked call saying that the server had gacked, and asking if I could do anything to save the data. Then I'm told that there are no backups whatsoever. Ouch. So I'm thousands of miles away, trying to recover the entire operation from a roasted hard drive on a computer which would no longer even boot, not even enough to install an OS (this was a RH Linux 6.1 box) on a different partition. Eventually I was able to get almost all the data back, including all the really critical stuff, after I had him put the hard drive on a different computer, but for a few hours there, everyone was sweating bullets. I can only imagine the reaction if investors dropped in on us while this Keystone Kops episode was going on. I have that mental image of one of those cartoons where a bag of money sprouts wings and flies away.
Hardware failure doesn't always happen to "someone else." Make those backups.
Cheers,
ZicoKnows@hotmail.com
My experiences incorperating (Score:3)
Neither of us knew anything so we went to city court house and started asking questions. A month or two later we were a company. We only stared with about $2,000 so it must not have costs much. I think our biggest expense was a lawyer which I think we could have gotten by without one but it was nice to have someone make sure we didn't get things too wrong. The government won't tell you until it is too late (or so I hear)
I don't keep all the records (my partner does, thank god, and I just know enough to make sure the numbers add up about right) but I can tell you it is very important to keep good records of everything. We were slack for about 4 months and it is still a big headache almost a year later.
I don't know if this applies to y'all but my partner and I had to learn to trust the other to make business decisions with out the other. We were running everything past each other and there is nothing like a committee to stop progress when you need to get your feet under you asap.
Hope this helps some.
Citrix
Start-up Sausages (Score:1)
You can contract lawyers indefinitely, and the good ones know their limitations and tend to sub-contract to the best lawyer for the job anyway.
CFO's are farging handy. Remember, though. It's just a title. You don't need a purebreed, and you don't need someone with an MBA. I know a CFO who raised $80M w/ very little formal business training, but he features a limitless sense of excitement and creativity. I am also pretty handy at raising money, and made one of the industry's studlier publishing contracts out of the gate, and I haven't had any training, either. If you know someone in school or at work who seems to have a knack for getting budgetary increases or funding or hefty purchase orders, odds are good they're a much better deal than hiring a fat cat CFO from Silly Valley. It definitely is cool to have a full-time guy on this, but you'll notice that he keeps coming back from meetings w/ investors saying, "Hey, um, I need a demo." The coders really are doing most of the work early on.
Likewise for a marketing guy. If you end up with a publishing company instead of handling your own sales, not only is a marketing guy largely uneccessary, but you'll find that there is advance-on-royalty money available. It's much tastier money than VC.
Because you're a software company, it's mostly about your burn rate. If you do the math, you'll notice that by far, your biggest expenditure will be salaries. Writing a design doc and schedule for your project and then, um, doubling or tripling the time, is going to be a useful wake-up call on how much money you need and when you need it. A really sexy schedule, design doc, and description of the team can literally be turned into a publishing contract w/ advances on royalties paid on milestones. In my experience, milestones cometh every few months as large checks that you kiss and dance around.
Some specific advice:
1. Do not get yourself overworked about trade shows like CES or Comdex. Chasing demos can become a full-time sport and can easily kill your company due to their disruptive effect on development. My advice- ignore them completely until everyone who comes by your company and checks out your software instantly suffers from violent, uncontrollable priapism.
2. Troll schools. If you need cheap, awesome talent, troll your high school and/or college. Ask the teachers who the most kick-ass student was at so-and-so, then track him down. It is very flattering to be courted this way, so you might be surprised at how easy it is to score.
3. Use free software with source code for the long run. Expensive software is usually only useful in the short run. I just wanted to say that. I don't think that's advice. It's just an observation. I don't know what to do with it yet.
4. Ban C++. If you must go OOP, use Java, but don't tell your publisher or investors. Java actually kicks ripe bottom. Don't knock it. C is also a dandy, dandy language. Most of the studliest code I've seen (including almost everything open sourced) is still written in C. I'm prejudiced against C++ because although you find great coders who use it, they tend to have violently clashing styles, which causes all kinds of headaches you don't need.
5. Remember humor. When you realize that one of your employees, publishers, or investors is being an asshole, don't get all soap opera-y. If you want to talk about it before doing something about it, then remember to use colorful analogy and strive to make someone giggle. In a small, hungry company, bankruptcy looms ominously and constantly. No one needs more drama. If you need inspiration, go to slashdot and read the "5, Funny" posts. You'll find them surprisingly poignant.
6. Artwork. Holy mother of pearl. Believe me when I say you can easily, easily, easily keep a full-time artist busy. Artists work for cheap, because
7. Random last-ditch effort anecdote: make it a plug-in. If things start going to poopoo, see how hard it is to make it a Netscape plug-in. A friend of mine did this once w/ a 3d engine, and he got a lot more attention from investors as a result. Hehe.
8. Consider cross-platform development. Developing an executable for both Windows and Linux, for example, helps you isolate bugs in your code versus bugs in your understanding of OS & library services.
9. Do not design for the "everyday guy." You have no idea what you're talking about. Niche markets are often more profitable and better to focus on for a long-term business. If it's between making a spreadsheet that does everything for everybody and a spreadsheet that kicks ass for industrial plastic extruders, go for the latter. It'll probably give you more money up front, too. Barring a paying gig, make something that excites you personally.
10. If you don't think you can do it in 2 years, don't do it. People get burned out. Your exciting start-up will turn into a pit of guilt & despair as your first mega-studly geeks decide to bail. Really try to realisticly figure out what you can do in two years, and if you think it's too much, think of something else.
That's enough BS for now. I wish you guys the best of luck!
Advice.. (Score:2)
#1) Copyright *everything* . Trust me on that one.
#2) Stay quiet until you're ready for showtime.
#3) Dont compete if you can cooperate instead.
#4) NDA's are your friend.
#5) Dont trust people who make their living from other people's work.
#6) Know when youre in a position to dictate terms, and know when you're not.
Bowie J. Poag
Project Manager, PROPAGANDA For Linux (http://propaganda.themes.org [themes.org])
Re:Experienced businessmen (Score:2)
2. Your outline of a generic business plan shows that you do not understand anything about writing business plans. Typical business plans, the ones used to seek VC, focus highly on the financials and less on the product or service. Details about how you treat your employees or how well respected you are in the business community are almost never in a business plan: treating your employees well and being an upstanding member of the business community are expected, not optional.
The point is that there are many ways to a profit. If profit is your sole goal, do not open a business.
Profit is the point of any business. Sure there are other goals for a business, but any sucessful business' overriding goal is to make a profit. If that is not your main goal, don't run a business: you don't have what it takes to be an entreprenuer.
Re:Profit isn't the only thing (Score:2)
True. Marketing and product are the keys to serving your customers. BUT, this illustrates my point about the four cornerstones (see my original post).
If marketing and product are strong, sure you will sell a product, and yes, you will get income. However, if you don't make a profit, 1) your business will eventually fail, and 2) what's the point of running a business that doesn't make a product.
And yes, you cannot make a profit without selling something. If your financials are strong and your product and marketing are weak, you will not turn a profit, and thus your business will eventually fail.
So while your goal is to make a profit, good product and good marketing will get you there. But they will not make your business succeed alone.
The goal is to make a profit, not provide some social service to benefit society. If you get nothing out of it (no profit), you have not succeeded, no matter how much you say that your product is great.
If your goal is not to make a profit, and your goal is to produce a really great product and you don't care about money, then you should build that product, but not as a business, as an employee of someone else's business. Becuase if you don't care about profit, then your business will most likely not make one, and that is what causes many many business failures.
Re:Experienced businessmen (Score:4)
There are four "cornerstones" a business really needs to be built on: sales/marketing, administration, accounting/finance and production (product or service). If any of these cornerstones are weak, your building (business) will come crashing down.
Most people make the basic mistake of assuming that a great product will make a great business. This is a myth! Look at McDonald's, which is pretty much the world's largest fast food chain. OK: All those who think McDonald's makes the greatest burgers you've ever tasted raise your hands! What? Nobody? (Actually, I'm sure I'm going to get SOME loser who's going to say that McDonald's burgers are awesome. Go away...:)
McDonald's Corporation is big and successful for a few reasons: great marketing is surely one of them. But they also have a business administration system by which any McDonald's franchise is basically guaranteed to make money if they follow the system to the letter. Cost controls are in place. Training, hiring, and managing employees are all part of this system. Accounting systems are part of it. These things are all first-rate and tailored for McDonald's line of business. And these seemingly "boring" business tasks can make or break your organization.
I know what you might say: "But McDonald's make burgers and we're making software!" Software Shchmoftware. A widget is a widget. All businesses are about making money and the product is only a means of doing that. Your key management -- the people in charge of business administration, accounting/finance, and marketing, are people that should not be "in love" with the product. Leave that to your people who are making the software. People who are "in love" with the product will be blinded by it, not seeing the forest for the trees. Those three cornerstones must be as strong as (or even stronger than) your product cornerstone.
I'm a person who's written business plans and seen business startups fail. And I have also seem them succeed. And I can tell you that the most important thing to keep in mind is to realize that when you are building a business, you are putting everything on the line. Build your business on a strong foundation and you will succeed. Ignore one of those cornerstones and you will most certainly fail. Prepare now, because you don't want to be chasing fires later.
Good Luck,
Rob
Some notes from the front (Score:2)
Don't staff up before you really know you can fully utilize those people. I think there are many parts of any business that can be handled by outside help, like agencies or contractors. Keep your internal people working on the core technologies and core business.
Keep your workforce diverse. Too many of any of the following groups can lead to uneven communication: former co-workers, friends, family, college buddies, too many people from one recruiter or reference.
Don't say you'll build everything yourself. Keep in mind that for most goals you have 3 choices
--use existing technologies (off the shelf)
--partner with another company (pro services)
--go it alone
Take a few extra cycles to evaluate the pro's and con's of each approach. Prioritze the wheels that you wish to reinvent.
Show me love! (Score:5)
The first startup didn't hire anyone, so it never got off the ground. Lesson: If the existing staff is already working their collective ass off for you, and there's more work in the queue, get more people. The trick here is to not hire more people than you need.
The second company managed to hire an extremely talented staff for below industry-standard wages, due to the lure of the stock, but failed to keep this staff by awarding 3% raises to everyone in the company. By giving the top performers the same amount of raise and stock options as those not performing to the same level, the company all but assured that the talent would leave in droves. And they did. Lesson: A little extra money in the right place goes a long way to keep your talent.
The third company had a mostly incompetent staff and was the most aggravating company to work for out of the three. The handful of competent people there carried the load of the greater numbers of slackers, whiners, and incompetants. Lesson: It doesn't take too many bad apples to ruin the whole bunch.
I'd say besides what I already mentioned, one of the most important things to keep in mind is that an employee who wants to be at work, will be willing to go the extra mile to make it succeed.
I hope this helps. There are alot of hard lessons to be learned in the land of startups. Unfortunately the only way anyone learns anything is to fuck up and adjust accordingly.
Good luck.
This is why I love slashdot (Score:2)
Be careful, and good luck (Score:5)
Go with people you trust
I've done this three times, and twice come unstuck because of failures of trust between the technical people and the finance/sales people.
In the first case we were in a long development cycle for a product. The finance director kept giving us reports which said, yes, things were tight, but we were solvent and could do it. If he hadn't, we'd have diverted effort into consulting, which would have made a bit of immediate income.
In the end, just as we were about to launch the product, we ran out of money very hard. The finance director (who was experienced, and a personal friend) had been keeping two sets of books, and showing the rest of the team doctored figures. His excuse? 'If you'd known how bad things really were, you have gone off and done other things and we'd never have got the product finished'. Well meant, but not helpful.
In the second, the marketing director, a very experienced businessman introduced to us by the local business development agency, tride to bribe a local government representative to get a us contract. After we'd launched product, as sales were taking off, when we were already nicely profitable. Well meant, but very, very stupid.
If you're east of the Atlantic, don't waste time with VCs
I could not possibly count the hours I've put in to trying to raise venture capital. With excellent business plans - I had a business plan for Web auctions fully fleshed out and costed back in 1996, for example - competent key people, all that was needed (except finance) to make the project fly. It's just a complete waste of time, here in the UK. UK Venture Capitalist houses are extremely cautious and do not like either technical projects or geeks. If you invested that same amount of time in development that you waste hunting VC, you'd get your product to market.
I know only three groups who've successfully gone down the VC route, two from here in Scotland, one from France. All three moved their whole companies to California, first.
Don't take it too seriously
But finally, remember that it's a gamble, a chancy game. I wish you all the best: but, if you fail, remember that it's a set-back, not a disaster. Don't put yourself in a position where the company going down would personally bankrupt you. If it does happen, and you're reasonably sure the reason it happened wasn't due to your incompetence of some deep personal failing, brush yourself off, sort the mess out, and start again.
How the heck do you write a biz plan? (Score:2)
I have spent a lot of time researching what you need and have always been blocked by the business plan requirement.
1. A good biz plan has detailed projections of sales, marketing, costs, etc. How does one figure out how many copies of the app they are going to sell, at what price, etc? Are you expected to just make these numbers up? I can see real companies doing research (whatever a marketing group would do to come up with it), but again, we are only at the idea stage.
2. A biz plan also expects a good, solid mgmt team in place. Pray tell how does this happen without a business with considerable revenue (at least enough to pay mgmt salaries)?
I am really down in the dumps because of this roadblock. The product we are working on is something we really believe in (yeah, yeah, talk is cheap we know).
Any ideas for angel funding (besides go find someone that will fund you). I don't know ANYONE that has $200k+ to throw around on some idea.
We have some basic architecture in place (at the software level), but we need a lot more time to work on it (basically we have to be full time at it which we can't do--we both have fulltime jobs in the "industry").
Don't hire your friends (Score:4)
Re:Experienced businessmen (Score:2)
Advice people hate to listen to (Score:4)
1. Just because you can make better products than a successful company doesn't mean you'll be able to get anywhere near that level of success. When that company started out, they were in a different situation than you (maybe they started five years ago for example, when the landscape was different). And you're not seeing the years of work that went into doing non-techie stuff like marketing and generally making good decisions.
2. Look at the median sales for your field, not the mean. A very common mistake is for a software entrepeneur to say "Big Company X has sold 2,000,000 copies of its software; all we need to do is sell 5% of that to stay in business." That's not how it works. Realistically, a handful of big companies might sell 90% of the products in a field, and that remaining 10 is made up of hundreds of little guys trying to get some action. So while the mean number of sales might be 100,000, the median might be 10.
Unconstructive criticism (Score:2)
This might be considered draconian by a lot of people - and myself included. I'd like to emphasize that this applies only when you're on the clock and thus a formal representative of the company. Outside your work, you're constrained only by the bounds of legality - although if someone hates things so much, they should probably quit, for everyone's benefit.
Not all managers are good ones (most are middling to poor, as you might expect) and if you can't influence them directly or they won't listen, you should vote with your feet and demonstrate the error of their ways in the most direct way possible.
In your case, where you're managing the employee, you might have to speak clearly on this matter and tell him straight out what's acceptable to you and to the company. Be sure to cover yourself first, of course; if you're going to tell him that he can say what he wants so long as he's off the clock, but not on it, you might want to consult your boss, or better yet your company's general counsel.
A malcontent subordinate isn't worth risking your future for, and a black mark can kill a manager's ascent quicker than you'd think - there is simply too much competition in junior management unless you have some very special skills.
--
Growing pains inevitable (Score:3)
Your corporate culture is going to change during the startup and growth phase. Each will require different styles of management and different styles of worker - and sometimes different workers.That may sound cruel, but think about it; the people you want running the show when you have 200 workers aren't necessarily the same that you want when you're running three or four coders out of somebody's garage.
Many companies fold during this transition. Getting a few jobs and contracts and filling these orders is easy compared to attempting steady growth.
Everything in your business model, from billing rates to accounting methods, has to be checked and rechecked. Many companies, especially in high-tech, end up in debt at the start of their existence; then, in order to pay the debt, they incur more debt going after projects with questtionabe margins. They build more debt as growth continues until they become unsalable and unsteady and finally topple.
--
Avoid using proprietary languages! (Score:4)
By the way, on an offtopic question, does anyone know of any projects to develop an open source variant of the xBase Language? I would be interested in contributing 14 years of experience.
How To Do It And... (Score:4)
"How To Do It And Not Get It From Someone Who Did It And Got It!"
:)
1: The planning is everything, the plan is nothing
Damn straight you should have that plan written out! It's for you - to hell with anyone else who reads it. If they read it and it helps, bargain. Just never forget, it's for you.
Also, once you've written it, be ready to throw the whole lot away and write it again if necessary. If I meet a leading-edge project or a start-up team which has a plan that hasn't been updated in a month, I start running.
No shit - it's the act of planning that's critical. You've looked around, you've researched, you've figured something out and you've written it down so that everyone involved understands & agrees. If you don't have that, you have no foundation.
Of course, tomorrow brings something entirely new (new tech, new prospects, change in owners, etc etc etc). Don't valiantly attempt to change reality to fit your now outdated plan. Modify those parts of the plan as necessary, get everyone to agree to the new ideas and get back into the work.
Trust me, it will make one hell of a difference. I'm doing a new company now and I thought I could get away without doing the plan. HAH! Big F**King mistake. Mind you, if I'd done the planning right in the start, I wouldn't have dumped 7 months into this turkey (note: I've met some great people, learned some wonderful things and I think we can still make it fly - maybe the stress & lack of $$$ will be worth it???
2: Worship Your Prospects/Customers
If you treat your customers/prospects with extreme respect, act professionally (* see below for definition of "professionally"
3: Acting Professionally
This does not mean always wearing a Brooks Brothers Shirt, Armani Suit and spewing forth sensless metaphors ("Let's just roll it all up into one big ball of wax, gentlemen"
To me, acting professionally means:
4: Marketing
Good marketing walks a fine line between "truth" and "bullshit, arse licking insanity" - trust me, I've been doing marketing as well as tech stuff. You need to be able to tell the customer about what you have in such a way that it sounds like what they want without bullshitting (don't say it's a 2 tonne truck when it's actually a new form of moped
Get close to the customers and try to learn their language. Watch how they react and adjust as you go, etc. Perform "active listening" (where you say back to the person what you think they've said - not like a parrot though
Yes, that's right, it's called "People Skills" - you have to come out from behind the computer screen, dress presentably (for your client - suit if you have to, golf shirt, riped jeans - what ever they're expecting/comfortable with
5: Good Advisors
You don't know everything. Your team probably doesn't know everything. Find people who know what you want to know and learn from them. Pick the ones who are where you want to be. Don't pick the ones who aren't (sounds obvious, but you'd be surprised
Remember - you get what you pay for. It may not always be in $$$ or stock, but you should pay for it in some way (hell, the number of people I've taken out for a few drinks/dinner/lunch to try to learn from them... )
6: Prepare for the worst, hope for the best
It's not pessimistic - it's realisitc. Have contingencies in place and be ready. Don't get bogged down in the thinking/worrying but at least review what could go wrong and be ready. This doesn't mean you should stress/plan/prepare for/etc a meteor hitting the earth - it may wipe out your company but it'll probably wipe out a lot of other stuff too
7: Cashflow is King
You may look good on paper. It may only be another week until that client's work is done and they give you the final installment of the $2 million job. Unfortunately, your staff are ready to quit 'cos they've not been paid lately, you're getting legal notices from suppliers and the vultures are circling...
Don't splurge on style over substance! That mahogany desk you love will look great in one of those "ex dot.com startup" auction places.
How long 'till the next payment? Right, add a big fat margin for error (installation delayed, signatory canoing in the amazon, lost in the mail, etc etc etc). Got enough cash to survive 'til then? You'd better... (see point #6
8: Everything Else Already Said In This Thread
I cannot agree more with people who have said all those things already about:
I've worked in "startup" type companies in three countries now. It's the same in each one (well, OK, so the languages are often different, the laws are definitely different and sometimes it's easier/harder to get funding, but anyhow...
In a nutshell (and what else is Slashdot but a giant nutshell?
Re:Experienced businessmen (Score:2)
However, that doesn't mean that there is no value in having a geek understand sales. One of the most underrated skills around is being able to translate ideas between different groups of people, getting them talking in the same language. Whether he is that translator, or his is one of the people on the geek side of the room who needs to understand the salepeople, the knowledge is not necessarily wasted. Be good at what you do, but be able to explain it to the people around you.
Re:Don't hire some east coast banker to be your CE (Score:2)
Rule #1: Don't Sell Out
This implies something very important. Know what you want. Know your values, and what you are trying to do. There are a million compromises to be made in the world. A start-up may present you with more of them more quickly, but it is not unique in that. Some compromises are fine. Renting an office located closer to your potential investors may be a good compromise. Spend your time asking yourself about the potential investors, not the office. You can get out of a lease and rent a different office. That costs money, but it is doable. Pay attention to the important things.
Re:Experienced businessmen (Score:3)
Re:dont (Score:2)
Re:Raising money is not easy (Score:2)
But don't start your own. It might sound like fun but you won't have time to do any of the fun part, you'll spend it all trying to get money and hire people and deal with all of the tiny little snags like the broken water cooler. I suppose it depends on what your idea is though.
Re:dont (Score:2)
Oh wait..
Re:Management (uhg!) (Score:2)
Due to my military time, I have often worked for someone that was 5 to 7 years younger than me. They were almost always in a team lead position which is slightly different than a development manager role but I found them to be decent leaders in their position. Most of the development managers I've had were roughly my age or older but none of them were good leaders. Due to these experiences, I would say that character is much more important than age.
Re:Experienced businessmen (Score:5)
Also get a good lawyer. Interview several and ask for a reference or two. There are a lot of law firms that seem really good, but are in reality over burdened by the amount of activity going on right now in software and the Internet. There are some firms that will take you on deferred payment if you have a solid business plan. Some will even offer to offset fees in exchange for stock later down the road. Shop around. A good lawyer is essential, especially when you are dealing with VC.
Some tips from the front line:
1) Definitely pick a CEO and differentiate duties. In a start up, many of the founders will be doing many things, but make sure that one person has the eventual say. The previous poster is absolutely correct in stating that the CEO's main dities will be in raising money and forging relationships. If someone on your current management team can't do this, find someone who can.
As a startup, many times you see founders acting as "partners", each giving their input to every decision. Reaching a general consensus is a good thing to get everyone involved, but don't operate democratically, nothing will get done.
2) The previous post summed it up: Divide the equity equally amongst the founders. This also means that you should look closely at each founder. Some one who leaves after the first month because they were marginal in the first place can return to cause problems. Wayward founders can become a legal nightmare if you are successful. Equal equity is important to give a sense of fairness to all the founders. If you deviate from this, make sure that there is a real good reason for doing so.
3) Get your elevator pitch down. This means basically that you can powerfully explain what you company does to someone sharing an elevator with you. If it takes you five minutes to explain what the company does, then you need to do some rethinking! Keep it simple and powerful. Ideally it should be explained in a single sentence like, "We aim to be the Amazon.com of snack foods."
4) Think angel. For your first round of money, unless you have a VERY good business plan or an amazing management team (or both!) most VC will not touch you. There is a lot of hype about how much VC money is floating around, but the reality is that they are very selective in who they invest. Angels are your best bet for the initial seed round until you have something to show.
5) Initial valuation. Be careful. With a good idea, a good BP, and a capable management team, you should be able to get as much as a $5 million dollar valuation. But don't shoot too high. If you get too high a valuation, the next round investors will laugh at you. And if they come in at a lower valuation, you will definitely piss off the initial investors (not to mention invoking any legal nasties like ratcheting clauses that will probably be a part of your agreement). Moral: get a realistic valuation. Seek out angels first, unless you really think you have the Right Stuff(tm). In that case, go for it. There are a lot of good VC and they are indispensible for both cash and industry contacts and management assistance.
6) Don't get discouraged by competition! If you have a good idea, chances are that there are 20 other startups moving at the same time with a similar idea. Plan to execute quickly and make sure you do it better. Darwin works overtime in this economy, so be ready for it. But don't get discouraged by competition. Its inevitable and makes you work harder to make a valuable product or service.
7) Lastly, don't be afraid to admit you don't know something. The last thing that investors want to find out is that you lied to them about something. Be honest and frank and you might find that someone can get you your answer or provide a resource to assist. No plan is perfect. No team is perfect. And they know it.
Good luck to you all! Its a hard, long and frustrating road to start your own company, but the rewards are worth it. Even if you "fail" you take away very important lessons and experience to use next time.
Use proper English. (Score:2)
I spent a few months in California, and after I was terminated from the job I put my resume and availability up on dice.com. I got quite a few e-mails from recruiters, and one directly from a startup.
This particular person not only misspelled (and I mean grossly misspelled, not a typo) several words, but did not have correct grammar. Also, the tone of his mail was rather desperate. This left me with a bad first impression, and was one of the first dice.com replies that hit the round file.
Say what you want about the suits, but professionalism matters when it comes to communications with the public--that goes double for communications with other companies, and triple for potential employees. It doesn't mean you have to wear a suit, just use proper grammar/spelling/punctuation and don't use slang in company literature.
While I'm on the subject of California and dice.com, am I the only one who gets turned off by spam from recruiters that use "startup!" as if it was some magic mantra to attract employees?
Nathan
Learn from Homer... (Score:3)
Check out Greg's Bridge Page!
Raising money is not easy (Score:3)
- a solid idea which can defend in the marketplace
- a proven team (EXTREMELY important... especially to VCs)
- a solid financial plan (have a CPA check your assumptions + spreadsheets)
- LOTS and LOTS of connections
- LOTS and LOTS of luck
- good sales people
- good marketing people
This is what you don't need:
- a formal business plan (an executive summary will do)
- good technology (nobody cares)
And finally the cold hard facts:
1. VERY few companies get funded. Don't know the exact number, but I'd say les\s than 5%.
2. Of these, 80% of startups fail.
Enjoy!
Re:Experienced businessmen (Score:3)
And remember this chant when the shit hits the fan: "IPO... IPO... IPO... IPO... IPO..."
Good information. (Score:2)
I realize the topic may not necessarily be considered a small business, but everyone starts somewhere.
Enjoy the journey! (Score:2)
1) Management is a technology like any other. Hire someone who has experience, and knows the ropes. Give him/her the authority to make the decisions. I saw my first start-up submarine when one of the other founders would not release his authority to the CEO we hired.
2) Make sure that the market really wants what you are building. A good sign of this is if there are other companies spinning up to do the same thing you are. Don't let it discourage you, let it _motivate_ you! Jeff Bezos (Amazon.com) put it very well when he said:
3) Finally- the journey is what matters, enjoy the ride. If you really love what you are doing, then just do it, and do not focus too much on the endgame. In the end you will be happier, healthier, (and maybe even richer) for doing it!Good luck!
Re:Ship now (Score:2)
That's good advice for the traditional "build it and ship it" approach to software development.
OTOH, I think the original poster was talking about the post-Web business madness model. This is all about hyping the nuts off it, then selling out quick (IPO or whatever). Yes, it's stupid -- but how many of us really are prepared to turn down the cash bucket that's on offer these days ?
There's also the third model "Build it and they will come" (especially for web services). Great if you're the next Amazon, bad news if you're the next boo.com.
All three of these business models require a radically different approach to investment; how much you sell long-term for how much short-term benefit, attitude towards customers, and attitude towards product (roll it out gradually and sell as much as you can, when you can vs. keep it secret, then let the world now everything at once). All of these work in their right field, but they cause problems if you try to cross-apply them - don't mix them.
dont (Score:4)
Keys to startup success (Score:2)
Experienced businessmen (Score:5)
Get a good CFO once the seed money comes in. An accountant is NOT good enough. It takes time to raise money, be certain that you will know when the next infusion of capital is needed.
Decide on jobs initially. There NEEDS to be a President/CEO, his decision is final. You need a chain of command, not by committee. Make certain that whomever is your starting CEO is ready for the responsibility (raising money, forging alliances). Even more important, make certain that they are ready to step down when the company needs someone experienced in that role.
Divide the initial equity evenly among the founders. There should be NO room for equity fights in the beginning.
Hire good, intelligent, motivated employees. If one of your first hires is bad, you're sunk.
Good luck.
Alex
Re:Experienced businessmen (Score:2)
Just a followup on this. This is phenomenally good advice, unfortunately, it is not always easy to hire experienced business people, especially if you have no funding, however, you can always ask them to sit on either your board of directors, or an ad hoc advisory board.
Geeks and nerds also have a tendency to forget the more mundane aspects of a business (Disclaimer: I'm a geek, and I speak from experience.) Don't forget to either outsource your accounting to someone competent, or hire someone who really knows their way around accounting. There is nothing worse than not knowing what is happening to your money.
Lastly, we tend to like toys. Go easy on the toys and only spend what you really need. Many times it does not matter whether you are profitable or not. What really matters is how much money you have in the bank at anyone time. Profits are nice, but positive cashflow is nicer.
Stand Fast,
Have lots of customers (seriously) (Score:3)
A similar thing happened to me this summer. I've consulted for 10 years or so. In the past, we needed that money, luckily now we don't because my largest customer's largest customer dropped them -- they folded, I folded, we all folded.
I didn't really care, (our little boy was starting Kindergarten, so it gave me a chance to get involved with PTA, coaching soccer, etc), but it scrambled a lot of other people's lives.
It is very tempting to keep increasing the amount of time an attention you give to the people sending you the biggest check every month, but you will create either a tail wagging your dog, or a collapse-in-waiting.
Several pieces of advice (Score:5)
1. Choose a name that nobody else would think of using (something like Red Hat is a perfect example) - we got a pretty generic URL, but then it turned out that it was also trademarked (by someone else), so we still have stupid legal problems, which divert our time from the meaningful stuff.
2. When you go to VCs, don't think that they are stupid and can be blinded by bullshit and buzzwords (first-mover advantage, scalable model, etc.) - many (maybe most) of them have very technical backgrounds, started companies themselves, and can speak your language. However, it also helps to speak theirs - read a couple of issues of something like Forbes ASAP, Fast Company, etc. - I generally don't read them, but it helps to tune your mind to the right wavelenght before presentations
2a. Don't think that you are the smartest. If you have this idea, chances are that someone else also did. Moreover, chances are that some of the VCs already funded a similar company, so, obviously, avoid those ones - they will just steal the good ideas from your model for those companies (and they ARE allowed to do that, because they do not sign the NDAs)
2b. Don't give up - we went to A LOT OF VCs before finally getting funded.
2c. And if you are young, they WILL rip you off (in terms of equity they take vs. money they give). Life's a bitch. But if you're successful, it's not going to matter
3. Try to use all possible connections you have, even the weirdest ones. If you have some friends/professors/former bosses/etc. who are very well-known, or just merely very successful, try to get them as advisors - if they are nice they will agree (it's zero marginal cost to them), and you might benefit a lot by just mentioning them as an advisors. Try to get many people fast, even half-committed - it is much nicer to say that you have 10 people (and, of course, give names) when you try to rasie money than to say "well, we two have this great idea". Remember, at the very early stages funding is closely related to the size of the company, e.g. # of people in it.
4. Have fun. Always remember that you have nothing to lose. I personally consider this whole start-up thing to be a game, in which I can only lose time (which is valuable, but I've still got a lot of it - like 50 years
Good luck!!!
Get things on paper (Score:4)
These are things that could have been clarified from the beginning. Money makes people do really weird things, even good friends. Get it in writing from the top.
Take it from one who knows... (Score:2)
We're still here after 7 months so I guess that is proof enough in itself that I probably know what I'm talking about. Check us out on the web, we run probably the most friendly and service oriented web hosting company out there. Not to advertise or anything, but in today's world a little bit of service goes a long way...
Nathaniel P. Wilkerson
NPS Internet Solutions, LLC
www.npsis.com [npsis.com]
...and discuss expectations with friends (Score:2)
You didn't state what your intentions are for your company, as far as your personal income expectations. Do you intend to self-fund on a shoestring, and invest with sweat equity? Do you intend to draw a salary, and live off of someone else's dime until the company becomes profitable (Venture Capital)? Do you intend to do an IPO in five years or less? Do you intend to sell out to Bill G. in 3 years and retire? This is the first decision you must make, since all other decisions will flow from it. That doesn't mean you can't change your mind down the road and go a different direction - you will need to be flexible no matter which way you go. You can't tell what your next step is if you don't know where you want to end up.
And this brings me to the point I wanted to make. It's one thing to want to make a living working with friends. But that can include all the options I listed above. It won't work if you and your friends all have different expectations of where the company should end up. Discuss it NOW. Think about it for a while. Discuss it AGAIN. Repeat.
You also need to decide what will be more important - the succes of the company, or maintaining a friendship. No matter which direction you go, you will most likely be faced with making this decision at some point, and your decision will determine your action. There is no 'right' answer to this one, but you must be consistent. Waffling will get you nowhere. If your friends decide the company is more important, and you decide the friendship is more important, you will disagree on business decisions often.
And if you are doing a shoestring startup, be aware of your partners ability to hang in there financially. A shoestring startup often means that at some point, you may want or need to forego some personal income to reinvest in the company, or because of a 'slow month'. If you have few monthly payments to make, you can get by. But if one of your partners (or you) is engaged, and his girlfriend is talking about 3 kids, be aware that his ability to 'take a hit' in personal income is going to be much less than yours. He will need to provide for his family, and you can't blame him for that. But it will force hard decisions and probably hard feelings.
Also, if you are a shoestring startup, be aware of each person's strengths and weaknesses. Chances are, you are a Geek (Wear It Proud!) and so are your partners. But somebody's got to be the boss. And somebody's got to be in charge of emptying wastebaskets and recycling the cans. So pick a CEO, a Purchasing Manager, a Housekeeping Manager, etc.; and then change jobs every 60 days. You will learn a lot about you and your partners' strengths and weaknesses in the process, and get an idea what's involved in each of the jobs and an appreciation for each of them. You will be much better qualified to decide when to hire someone for a position and who to pick. And you will most likely find that someone in your group 'makes a job look easy'. But if you never try the job, you may think 'he doesn't work as hard as I do'. Been there, Done that.
You may think that all this advice is free. It's not. By asking the question, you obligated yourself to come back here in a year and tell us how it went. And share what you learned. Pass It On.
Good Luck.
Don't let investors get control of the company! (Score:2)
Ala NPI [npix.com]. The investors brought in their own CEO, and she replaced all of upper managment with her own people, the company went to hell, and she moved on to destroy the next company.
Re:Look at Extreme Networks (Score:2)
There is an interesting story that goes with them, though. Before they actually had released their product, they demoed it at NetWorld/Interop (and, interestingly enough, won "Best of Show"). People were so excited that they were actually purchacing empty Summit switches from the company for quite a large sum (a few thousand each). So the joke is that the company's first real income was from selling dummy boxes stuffed with peg board.
It's not that funny, but interesting never the less.
What is your team missing? (Score:5)
1. The aforementioned crash & burn went ch. 13 because the two key founders had a combined emotional age of 6. Choose the team carefully. The VC's also primarily fund on quality and track record of the team.
2. What is missing from your team? A good marketing guy? No one is more important to success -- including the chief software architect -- so park your geek ego, OK? By the way, most marketing guys are not *good* marketing guys -- get someone that is clearly insightful. If it smells like arm-waving BS, it is. Do you have a manager? You need someone who has actual people management experience for a few years with >16 person teams... this is *not* an area for OJT.. and well meaning but clueless about people management and keeping a shop running will drive good people away... besides burning up your money.
3. Remember that the job of a start-up team is to put scalable processes in place. Almost all companies go through "growing pains". Most can be avoided. The pain is caused by outgrowing the processes that work for small teams. Example: 2 guys whacking code can survive without a defect tracking system. 20 can not. Every process needs to be examined for scalability.. you will miss some, and those will be the walls you hit.
4. When something begins to smell a little like a mistake... ruthlessly surface the issue and squash the mistake immediatly. Bad hire? Throw the bum out NOW. Bad choice of tool? ditto. Chapter 13, Inc. would have done far better if the board had been *less* patient with the clowns at the controls. Small companies can take too many self-inflicted wounds.
5. You *do* need a business plan. Revise it regularly. It's for *you*, not the VC's. Keeps you focused on what matters.
6. Pinch pennies, but in the right places. It's pretty simple, the less money you burn, the more of the company you keep for yourself. Cheap used furniture or even plywood holds up a monitor as well as anything else. Use your money to buy tools that make your coders squirt ascii like a firehose and squash bugs in dozens.
7. There happens to be way more money in the hands of VC's right now than at any time in recent decades. WAY more. They are funding stupid deals that will crash and burn. They are funding big deals because little $2M dribbles doesn't invest it fast enough. Your challenge will be getting noticed, because they are too busy pushing money into the hands of people they already know... people that have made them money in the past. So.. back to #2, do you have somebody on your team that knows how to raise money from VC's? Find one.
And best of luck. A start up will be be best, worst, most educational, most tiring E-ticket ride you can find. Whether you make a zillion or if you crash and burn.
Re:Sexy Secretaries (Score:2)
Re:Experienced businessmen (Score:2)
---
Employees (Score:2)
Re:Get things on paper (Score:2)
Business (Score:2)
Startup Advice (Score:2)
Listen to all the trite stupid advice you ever heard about HR because if you try to carry any dead weight it will make you weep with pain but motivated employees who are stoked about being on the team will make 90 hours a week sound fun.
Also don't fuck with the lawyers or VCs but don't be scared either. Know exactly what and why you want it and they will respect you. Write a 40 page business plan, documents detailing work divisions, operations, everything. Then once you have all this data toss it in the shredder and be flexible. The excercise of thinking through the plan is key but the implementation can never be static. Luck!
Funding & Building a Startup (Score:3)
http://idealab.com
http://ecompanies.com
I disagree with a few points.
1) Unequal founders - Beginners often want equal percentages. Hogwash. Checkout venture capital homepages for typical percentages.
http://benchmarkcapital.com
http://thestandard.com
2) Full business plans are not always needed at the early stages. However, she adds, "business plans are becoming less and less crucial. It's all about execution and how fast [the founders] can move." The reason? "It's because the world is moving so fast. We want to see an executive summary and a marketing plan; I need to know what the costs are because the revenues are totally fictitious." Besides, Comaford notes, business plans change so frequently that some are almost outdated by the time they're drafted.
3) Decent venture capitalists fund maybe 1% of their offers (pre-screened). Maybe 1-2 million internet ideas being shopped for money today. Become better informed about venture capital mechanics.
Look at CMGI, ICGE, Draper, etc...
http://www.drapervc.com/CurrentPortfolio.html
Even after the pickiness of VCs,
Maybe 15% of VC-funded companies are successful.
Raise this to 50% for CMGI-funded companies.
Small Businesses - 90% fail within three years (due primarily to cash flow problems).
Even 14 of 15 of penny stock IPOs sink.
Some early stages of the startup company hierarchy.
1) $50,000-100,000 small business, home business
2-5) $200,000-2,000,000 idea (2-4 people)
- $100,000 annual revenues, $10,000 profit (after salary).
- P/E ratio of 50!
- Job of early people is to build this idea into stage 2.
- Spend as little money as possible
- Assemble management team, make sound business model & strategy
- Write executive summary of business plan
- Answer all critical questions
- Does NOT mean do 100% market analysis/research.
6) $5,000,000-10,000,000 idea/company (5-15 people)
- Seed Money:
Better - $500,000 - $1,000,000 for 5-15%
Typical - $1,000,000 - $2,000,000 for 20-40%
Worse - $1,000,000 - $4,000,000 for 40-60%
- Finish business plan for 1st stage funding
- 3 months to get company to next stage
- Spend money as fast as necessary to move quickly.
- Take as little money as you really need (for quick expansion).
- Ask for money (when you don't need it) to get powerful people on your side. Make connections.
8) $20,000,000 - 50,000,000 company (10-50 people)
- 1st Stage VC $1,000,000 - $10,000,000 for 10-30%
- Try to get funding from well-known VCs: CMGI, Draper, etc..., even if you get less.
- Proof of concept.
- Buy up competitors.
- Hire professional CFO/CTO.
- Staff big-name board of directors.
- Make strategic alliances and partnerships.
10) $100 million - 200 million company (50-200 people)
- 2nd Stage VC $20,000,000 -$100,000,000 for 20-50%
- Buy up more competitors and allied companies.
- Expand to 300-400 people. Need headcount for IPO.
- Hire big-name CEO/Chairman.
12) $500 million - 2 billion (300-600 people)
- "Small-cap company", maybe a penny stock
- IPO $20,000,000 -$500,000,000 for 10-30%
- B2bstores.com (BTBC) to IPO for $28 million (2/7)
- Palm (PALM) to IPO for $345 million (2/28)
Advice:
1) Connections. A decent business idea with good connections often beats many great ideas. Use funding sources, lawyers, and accountants for their connections and ability to help your company.
2) Management Team. Totally crucial. Find people with real startup experience as advisors and/or management team. Experienced CEOs/managers can do more with 40 hr employee work weeks than newbies can do with 100 hr weeks. Experience tells you what NOT to do.
3) Communication. Between team members.
4) Community. Use CEO resources in your area. In LA,
http://directors.org
http://www.digitalcoastweekly.com/
In NY, check out Silicon Alley,
http://siliconalley.com/sa/events.cfm
http://www.atnewyork.com/
http://www.siliconalleyreporter.com
You Bay Area guys have it easy...
Other Good Articles:
Stuff to watch out for when starting
http://www.thestandard.com/article/display/0,1151
How much to pay employees
http://www.thestandard.com/metrics/display/0,2149
Business plans - are they necesssary?
http://www.thestandard.com/article/display/0,1151