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Ten Geek Business Myths 262

hpcanswers writes "Venture capitalist Ron Garret has posted a list of eleven (despite the title) common mistakes entrepreneurs with a technology background make. A common theme is that good ideas sell; in reality, what a customer wants sells. By extension, having a Ph.D. and holding a patent are not particularly helpful if the intended end-user does not have the same level of understanding of the widget as the creator does."
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Ten Geek Business Myths

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  • Microsoft is probably the canonical example of a successful business, and it has never had a single brilliant idea in its entire history. (To the contrary, Microsoft has achieved success largely by seeking out and destroying other people's brilliant ideas.)
    Another Microsoft screed? Did Ron Garret just get fired from Microsoft?
    • Re: (Score:3, Informative)

      by pkhuong ( 686673 )
      No, he resigned from GOOG (his last employer, afaik) some time ago.
    • IOW, one for each year that they have existed. As it is, I doubt that you could come up with 5 that others do not point to and show that it came from elsewhere.

      Besides, the guy is giving MS a compliment (backhanded, but still a compliment).
      • He said that Bill G. was a pretty smart guy, but he really had nothing nice to say about MS, aside from the fact that they're a terrifically successful company. Unless you're an evil genius, and you take the phrase "achieved success largely by seeking out and destroying other people's brilliant ideas" as a compliment.
      • by xxxJonBoyxxx ( 565205 ) on Monday October 02, 2006 @12:32PM (#16278447)
        IOW, one for each year that they have existed. As it is, I doubt that you could come up with 5 that others do not point to and show that it came from elsewhere.
        I'll just go for five brilliant ideas:
        • Bundle your OS part with the purchase of any PC compatible machine, not just the hardware we built.
        • Only license your core apps (Office, SQL Server) on non-threatening operating systems to prevent switching.
        • Bundle TCP/IP connectivity with the OS.
        • Bundle a web browser with the OS.
        • Make LDAP accessible to mere mortals (AD).
        (Of course, these five are also reasons why some people hate Microsoft.)
        Besides, the guy is giving MS a compliment (backhanded, but still a compliment).
        If his target audience is techies (who value "innovation"), then it's not a compliment - period.
        • Re: (Score:3, Informative)

          by Sique ( 173459 )

          I'll just go for five brilliant ideas:

          • Bundle your OS part with the purchase of any PC compatible machine, not just the hardware we built.
          • Only license your core apps (Office, SQL Server) on non-threatening operating systems to prevent switching.
          • Bundle TCP/IP connectivity with the OS.
          • Bundle a web browser with the OS.
          • Make LDAP accessible to mere mortals (AD).

          At least your third point is mood. TCP/IP was bundled with a lot of other operating systems way before Microsoft Windows. For instance UNIX V3 was basicly

          • And even with Windows 95 the TCP/IP support was rather halfhearty

            You sure you worked with Trumpet Winsock? After dicking with that, Windows 95's support for TCP/IP was HUGE!

            TCP/IP was bundled with a lot of other operating systems way before Microsoft Windows. For instance UNIX V3 was basicly build around TCP/IP.

            Perhaps I should have said "end user operating systems". Anyone know when MacOS first supported TCP/IP? (I'm pretty sure it was in the middle of "System 7".)

          • by squiggleslash ( 241428 ) on Monday October 02, 2006 @01:56PM (#16280009) Homepage Journal
            TOS and Kickstart already had IP-Stacks.

            Well, in the sense they were available, yes, but the guy was talking about Microsoft going one step further and bundling it. I never owned an Atari ST, but I can tell you that none of the TCP/IP stacks for the Amiga were ever bundled with it in Commodore's lifetime.

            AS225, Commodore's own stack, was never even released outside of a handful of developers. Amiga users had to rely upon AmiTCP or KA9Q (renamed "AmigaNOS") to get it to work. AmiTCP was free software (BSD license, IIRC) up until the 3.0 betas, but controvertially went shareware with version 4. KA9Q was... uh... yeah. You didn't want to use it.

            To go on to other mainstream platforms of the time: So far as I'm aware, it wasn't until the late nineties that MacOS had a stack bundled with it. Stacks were available before 1990, largely due to the Mac's entrenchment in academia, but they weren't bundled with the system. OS/2 Warp 3 "came with" a TCP/IP "stack", but for consumer versions it was close to useless. It only supported SLIP, and wasn't modular, so you couldn't just add a device driver for your Ethernet card (or just PPP) and it'd work, you'd have to throw the entire stack out and buy the premium version from IBM.

            So really, other than Unix, no mainstream operating systems came bundled with a full TCP/IP stack until Windows 95 did. I hate to say it, and maybe it'd have happened anyway, but Microsoft did pioneer there.

        • by Anonymous Coward
          Microsoft is probably the canonical example of a successful business, and it has never had a single brilliant idea in its entire history.

          False. Microsoft bought many of the most intelligent technicians in the world from its competitors, and some of them had brilliant ideas while working for Microsoft. How Microsoft used those ideas may not have been so brilliant, but they were there.

          And if they don't have any brains then it doesn't matter what they do.

          What a contradiction! He spent the whole article blas
        • Bundle your OS part with the purchase of any PC compatible machine, not just the hardware we built.

          Apple and DEC did it first, in other areas (ProDOS on the Franklins, DEC on the Alphas).

          Only license your core apps (Office, SQL Server) on non-threatening operating systems to prevent switching.

          AppleWorks, anybody?

          Bundle TCP/IP connectivity with the OS.

          Unix.

          Bundle a web browser with the OS.

          What was that OS I saw back in Windows 3.1 days that booted up on any comodity hardware directly into a bro
          • budling them all together in one "easy for accountants" licensing scheme
            The purpose of bundling isn't for the accountants; it's for the benefit of the seller: it forces more consumers to buy the same, more expensive thing because consumers cannot decouple the features they won't use from those they really want to buy. Phone companies, cable companies and many others all make heavy use of bundling for this reason.
        • First, I was looking for tech innovations as opposed to legal/marketing trickery (I should have spelled it out as well). But even here, you lose.
          1. CPM was around LONG before MS and it was licensed on all sorts of hardware (mostly z80). In addition, a MVS clone was sold on hardware that was not their own.
          2. IBM had been doing that for decades.
          3. Unix(and all of OSS) had been doing that for ages.
          4. OSS was already several years into that (both BSD and Linux).
          5. Actually, there are all sorts of tools out pre-MS that
      • MS succeeds at taking other peoples' good ideas, making them palatable to customers, and selling them in a manner that works for corporate purchasing departments. Like the article says, the product you're selling really doesn't matter; how many times have you seen an inferior product take the lead in a market simply because MS has more marketing and sales guys?

        MS has a good distribution network and their products work reasonably well (if you think MS software is crap, you haven't tried a lot of software fro
      • I can't name a single one that somebody else didn't do first- years earlier. Basic, disk based operating systems, GUIs, Office Suites, Flight Simulators- can you name a *single* one that was an original idea instead of a copy of what somebody else already did?
    • It is not going out and destroying other's ideas. It is going out and taking others ideas. PC DOS was bought for a few beads. Micorosft stole the Windows interface from Apple after Apple stole it from Xerox. Micorsoft stole the Stac compression modules for DOS 6, then sued them and ended up paying Stac a bunch of money.
    • by eno2001 ( 527078 )
      Wow. Vent much? He sure hit a nerve with you. Frankly I found his blog entry interesting as I am interested in starting a business of my own, but absolutely loathe business operations. His blog entry answered a lot of questions. It sounds like I don't really want to start a business after all. Why are you so harsh on the Ronzo?
      • "Hi, I'm a venture capitalist." Strike one. "Before I tell you anything useful, let me just say that Microsoft sucks." Strike two. "Yes, copying other good ideas is good. But before I go any further, let me publicly fawn over my previous employer." Yer' out!
        • by eno2001 ( 527078 )
          1. I'm not really capitalist, but I don't discredit every venture capitalist simply for being part of a system that I think is flawed. He had some great ideas in there.
          2. Microsoft DOES suck, but people say that so often that the reasons behind it get lost. The best way to say that Microsoft sucks succinctly is to stop using MS products (as I have) and use Apple or some *nix distro. I prefer Gentoo myself.
          3. There are few people who have original ideas. Implementation is what counts for me. If I like a
  • by zepo1a ( 958353 ) on Monday October 02, 2006 @12:11PM (#16278109)
    In case of a /.ing

    Myth #1: A brilliant idea will make you rich.
    Myth #2: If you build it they will come.
    Myth #3: Someone will steal your idea if you don't protect it.
    Myth #4: What you think matters.
    Myth #5: Financial models are bogus.
    Myth #6: What you know matters more than who you know.
    Myth #7: A Ph.D. means something.
    Myth #7: I need $5 million to start my business
    Myth #8: The idea is the most important part of my business plan.
    Myth #9: Having no competition is a good thing.
    Myth #10: After the IPO I'll be happy.
    • by Eccles ( 932 )
      Note the 2 #7s. This one goes up to 11!
      • Re: (Score:3, Funny)

        by corbettw ( 214229 )
        And one of those #7's is a "A PhD means something". Apparently, even an elementary education doesn't mean anything, if you don't need to be able to count to ten properly to be successful!
    • by creimer ( 824291 ) on Monday October 02, 2006 @12:32PM (#16278431) Homepage
      Myth #11: The marketing department can run a engineering company.

      I had a job interview for a QA position at 3Dfx a year before it went under. The interview with the QA manager went OK even though I kept asking myself if I wanted to work with someone who has a mohawk and body piercings (not exactly uber-professional). Then I had to be interviewed by the marketing hack. At that point, I did not want the job and they didn't offer the job since I had nothing to say to the marketing hack. Shortly after that, 3Dfx announced they were screwing over the board manufacturs by making their own boards to compete against them. Of course, they all jumped ship to nVidia and nVidia picked up the 3Dfx engineering team out of bankruptcy. No word on what happened to the marketing hack.
      • Re: (Score:3, Insightful)

        by wondafucka ( 621502 )
        The interview with the QA manager went OK even though I kept asking myself if I wanted to work with someone who has a mohawk and body piercings (not exactly uber-professional).

        Actually the person with a mowhawk WAS being professional. They were getting paid to do their job, making them professional. Their employer decided to evaluate them based upon their abilities, not what culture that person was a part of.

        Attire cannot tell you a person's value as a worker. Sloppy dressers can be detail-oriented. Worse

        • Re: (Score:2, Insightful)

          by ShieldW0lf ( 601553 )
          Well, if your job is to Manage people who are doing a task, and you put forth an image that shoves your own cultural meme right into their faces, that's confrontational, and that means you're not doing your job.

          To be good manager is, among other things, to be a good diplomat. To take great pains to ensure that your own cultural peculularities don't clash with others cultural peculularities and create conflict.

          A good manager should carry themself in a fashion that wouldn't shock or offend ANYONE they might
    • Re: (Score:3, Insightful)

      "Myth #8: The idea is the most important part of my business plan."

      The idea is really such a smal component. Engineers and Ph.D's tend to have a problem with this in particular. They always want the perfect product. The important part is finding the point of the marginal value curve that meets the market, then finding a way to exploit that market and excluding the competition from taking your market space. Not that the idea is the easy part, bu when compared to the rest of a business plan it is a very small
  • by terrahertz ( 911030 ) on Monday October 02, 2006 @12:12PM (#16278117)
    ...use soap, water, and deodorant liberally.

    You can let yourself slide back in to the "code daily, shower monthly" schedule after that seven-figure VC check is in the bank, k?
    • ...use soap, water, and deodorant liberally.

      That one's not a myth. It's something that they should be doing.
    • Obviously, you never got around Bill Gates back in the 70's, early 80s. There were times that he was rank at events. And there are plenty of other capitalists who would do the same thing.
  • PhDs (Score:3, Interesting)

    by gEvil (beta) ( 945888 ) on Monday October 02, 2006 @12:12PM (#16278129)
    Myth #7: A Ph.D. means something.

    Reality: The only thing a Ph.D. means is that you're not a moron, and you're willing to put up with the bullshit it takes to slog your way through a Ph.D. program somewhere.


    I agree with the second part of this statement, but take issue with the first. I deal with PhDs all day, every day. Many of them are indeed morons who happen to have a great depth of knowledge in one miniscule area. After several years of doing this job, I've concluded that the only thing a PhD proves is that you were able to devote several years to a PhD program.
    • by DrDitto ( 962751 )
      Let me guess, you are in product development? PhDs are not meant to be the guys pushing the products out the door. PhDs are meant to do research and advanced development that won't see the light of day for 5-8 years.

      What happens is that there is more demand for product development and that many of the PhDs end up doing it because they have to make a living somehow.
    • Re: (Score:3, Informative)

      by SoTuA ( 683507 )
      You left out the second part of what the article says about a PhD, which, in a nutshell, embodies why not many businesses are rushing to hire PhDs, and why getting a CS PhD almost always means you've forever commited yourself to academic jobs: For a PhD, what your peers think of you matters, while in business, what the customers think of you matters, and your customers in 99.9% of the cases aren't your peers.

      And yes, I've met one or two morons in PhD programs out there... some others who are brilliant but w
    • Re:PhDs (Score:5, Insightful)

      by BWJones ( 18351 ) * on Monday October 02, 2006 @12:32PM (#16278451) Homepage Journal
      Perhaps you would like to step into the role of a PhD who *does* perform research and development? I've found that most of the time when people say stuff like this, they have no real idea of what is involved in either obtaining a PhD or working as one.

      The PhD not only demonstrates that you are capable of thinking critically, it shows that one is able to communicate, analyze and create new "content" and make advancements. Speaking as a PhD, the job is much harder than I ever thought, though it is fun and I would not do anything differently. Having to write grants, write papers, teach, perform science, deal with administrative duties all at the same time is a much harder job than most folks realize. Of course that is just academia. If you add in work in the private sector on top of that, you have even more responsibilities (though prospects for more money). Some PhDs of course stick to industry and do quite well. That's all fine and dandy, I just like the additional challenge of academics in addition to commercial work.

      • Re:PhDs (Score:5, Insightful)

        by cvd6262 ( 180823 ) on Monday October 02, 2006 @01:01PM (#16278947)
        True.

        But there is also the point that (for some) education is a worthy pursuit in and of itself. It's value is intrinsic instead of instrumental.

        Since I began my PhD studies, I have worked (all expenses paid) on three continents, including taken my family on a semester-long assignment to Europe, and influenced national policy. I'm actually putting off defending my prospectus for a week because I have to meet with the National Academies to finish up a report with them. Because I've made the right connections (and I would like to think I'm proficient at my work), I'll leave school with very little debt (I'll owe about as much on my car as on my student loan).

        If I had to go into industry and I never used my advanced degree for anything in the professional world, I would still consider my graduate work worthwhile. In fact, I would still consider the last six years of my life the best of my life.

        That said, I do know a great deal of PhDs who are, in fact, morons.
    • It seems there's a lot of dispute (between you and the responders) about the merit of a Ph.D. I think this stems from ambiguity about what exactly is meant by a Ph.D. If you're talking about a Ph.D. in "marketing" or something like that, I can agree. But what the posters meant was that if you're doing some very in-depth, scientific research for your product, you absolutely need a Ph.D. -- to do that part of it. The confusion is in applying a Ph.D. from one area to an area where it doesn't imply expertis
  • by BadAnalogyGuy ( 945258 ) <BadAnalogyGuy@gmail.com> on Monday October 02, 2006 @12:14PM (#16278151)
    It's ironic. The two things that make engineers so good at engineering are the two things that make them so unsuited to running a business.

    Hubris is a trait of engineers that makes them strive for greatness in their products. After all, you can't really have good pride if you're constantly getting negative reactions to your stuff. However, it also leads to a close-mindedness and tunnel-vision in regards to other technologies and solutions. A good businessman must be able to survey the market and understand the positioning of his product. Someone who thinks that they have such a great solution that it is applicable to any and all problem domains is selling snake oil. See Netscape and Sun's Java for two examples of solutions that were billed as much more than they realistically were.

    Laziness is a good trait for engineers because it forces them to seek efficient, easily-implementable solutions to everyday problems. Automating tasks is absolutely essential to creating value in a company. However, the business side of running a business is not reduceable to a script. There are serious tradeoffs that must be weighed all the time in order to guide a business down the road to success. These can't be automated. The laziness trait leads engineers to seek easy solutions when they should be seeking difficult-to-find synergies. Well-designed software is modular with simple interfaces. Well-run businesses are well-integrated and derive their strength from business units coordinating with each other, not simply acting as a pipeline from one end to another.
    • Someone who thinks that they have such a great solution that it is applicable to any and all problem domains is selling snake oil.

      Yeah, but selling snake oil can be profitable.

      However, the business side of running a business is not reduceable to a script.

      This is very true. I once worked for an engineering firm, and the guy in charge used to be an engineer. They were constantly looking for ways to automate their business processes, which was fine, except that they wanted to do it to the point where the

  • Myth #11 (Score:5, Funny)

    by Siener ( 139990 ) on Monday October 02, 2006 @12:18PM (#16278215) Homepage
    Blogs are a good source of business advice
  • #1 is right (Score:5, Interesting)

    by CrazyJim1 ( 809850 ) on Monday October 02, 2006 @12:20PM (#16278239) Journal
    Myth #1: A brilliant idea will make you rich

    No a brilliant idea will make some other company rich because a single person doesn't have the capacity to make a full item. I've had many ideas that made other people rich in my life. I never run out of them. But I still live in the boonies :P
  • to sum it up, most geeks are out of touch with the common user...
    I am really attempting to act suprised.
    • Re:shocking (Score:5, Insightful)

      by Yvan256 ( 722131 ) on Monday October 02, 2006 @12:39PM (#16278549) Homepage Journal
      Best exemple of this: iTunes.

      A lot of people on Slashdot will complain that it takes too much memory, is heavy on the CPU, doesn't have enough settings/parameters, have DRM in store-bought songs.

      Normal users see a pretty program that's easy to use, that does everything that they want, including buying a single tune for 0.99$ on an otherwise 10-20$ CD. Add "connect cable to sync iPod automatically without doing anything else" and you've got a winner.

      When the linux community finally understands that (too many) choices are bad (and that automated everything isn't evil), linux on the desktop will be a real viable alternative. In the meantime, OS X is the only real-world alternative to Windows.

      Now let's sit back and see my score go to "flame/troll" by some linux user that doesn't see (or doesn't want to see) the point I'm making here.
  • I think that there are more than a few cases where all it took was a good idea for someone to make a ton of money.

    Just don't count on it paying for retirement..
  • No competition. (Score:5, Interesting)

    by Savage-Rabbit ( 308260 ) on Monday October 02, 2006 @12:29PM (#16278383)
    Myth #9: Having no competition is a good thing.

    Reality: If you have no competition the most likely reason for that is that there's no money to be made...


    He should take a look at a company called Microsoft. Creating a no-competition environment seems to have worked out well for them.

    ...There are six billion people on this planet, and it's very unlikely that every last of them will have left a lucrative market niche completely unexploited.

    Two words: iPod and iTunes ..... I'm not saying they are easy to find one but there are a few lucrative market niches that have been left completely unexploited and the funny part is that most of them are so bloody obvious that most people manage to overlook them.
    • Re: (Score:3, Informative)

      Microsoft thrives on crushing the competition, hence they are always dealing with competition. Even if competition is scarce in the spaces they operate in, having no competition usually means a lack of a potential market.

      "Two words: iPod and iTunes ..... I'm not saying they are easy to find one but there are a few lucrative market niches that have been left completely unexploited and the funny part is that most of them are so bloody obvious that most people manage to overlook them."

      Both of those markets alr
    • Re:No competition. (Score:4, Informative)

      by LWATCDR ( 28044 ) on Monday October 02, 2006 @12:39PM (#16278545) Homepage Journal
      "Two words: iPod and iTunes ..... I'm not saying they are easy to find one but there are a few lucrative market niches that have been left completely unexploited"
      Actually those are really bad examples.
      the Ipod wasn't close to the first music player. ITunes wasn't the first online music store.
      Apple just really did a great job of taking two existing ideas and implementing them well.
      What the guy missed was.
      "Great ideas will not make you rich. Great implementation of great ideas will make you rich."
      • "Two words: iPod and iTunes ..... I'm not saying they are easy to find one but there are a few lucrative market niches that have been left completely unexploited"
        Actually those are really bad examples.
        the Ipod wasn't close to the first music player. ITunes wasn't the first online music store.
        Apple just really did a great job of taking two existing ideas and implementing them well.
        What the guy missed was.
        "Great ideas will not make you rich. Great implementation of great ideas will make you rich."

        That is pret

    • Re: (Score:3, Insightful)

      by Gwala ( 309968 )
      Microsoft had plenty of competition. MS-DOS, MS BASIC were not alone at the time of their release.

      The iPod was in competition with Creative's players when it was released - Creative had been releasing MP3 players for god knows how long before the iPod.
    • You bring up three examples: Microsoft, iPod, and iTunes... all of which prove his point.

      As to Microsoft, you even used the key words, "creating a no competition environment." They didn't enter a market with no competition, they removed that competition which was there.

      iTunes: Certainly not the first music player on the market, nor was the iTMS the first music store. They didn't have a lack of competition, what they had was *bad* competition, which is what TFA says one wants.

      iPod: Same deal as with iTunes
    • Re:No competition. (Score:4, Informative)

      by soft_guy ( 534437 ) on Monday October 02, 2006 @12:47PM (#16278695)
      He should take a look at a company called Microsoft. Creating a no-competition environment seems to have worked out well for them.

      Microsoft had many early competitors. They have competitors now.

      iPod and iTunes were not new ideas. There were other MP3 players, there were other music managing applications, and there were other music download services. What Apple did was deliver a product that simply better than what the competition was offering at the time. Apple had competition when the introduced these things, they also have competition now.
    • by teslar ( 706653 )

      Two words: iPod and iTunes ..... I'm not saying they are easy to find one but there are a few lucrative market niches that have been left completely unexploited

      Others have pointed out the flaw in your argument there. I think a better criticism of the point in TFA would be to say that new niches are created all the time by the advent of new technologies (e.g. the mp3 player market you hint at). However, even getting there first does not guarantee success - in fact it probably only encourages someone else to

  • by jandrese ( 485 ) <kensama@vt.edu> on Monday October 02, 2006 @12:29PM (#16278385) Homepage Journal
    So we have a PhD who still thinks LISP is the best thing since sliced bread and has experiance building networking hardware that was fast, but not compatable with Ethernet. Sounds like a real academic to me. He does have a good point in "make sure customers for your product exist before you start your company", but overall the article reads like a bit of venting steam from an academic that tried to make a go of it in the "real world" and discovered just how different life is on the outside.
    • Back in the early 1990's there were several companies that tried to create network protocols, only about 3 have lived to tell the tail; And all of them now are Either Net, or have Either Net interfaces. It looks like now this guy is trying to bring people with ideas to people with capital to sell to people with money.
    • Well, LISP is the best thing since slice bread provided that your application meets this requirements:

      -Big memory and fast hardware (the same as Java/C#, but LISP competed in the time C was king, so was too slow for its time).
      -You don't need to have a traditional GUI -or- you have the $3000 bucks for a commercial license.
      -You don't need threads -or- you have the $3000 bucks for a commercial license.
      -You're a good coder (but LISP makes you better).

      As most programs are either GUI desktop applications, or are
      • ``-Big memory and fast hardware (the same as Java/C#, but LISP competed in the time C was king, so was too slow for its time).'' ...and before that, in the time that FORTRAN was king.

        ``-You don't need to have a traditional GUI -or- you have the $3000 bucks for a commercial license.'' ...or you could use wxCL or one of the GTK bindings, or use whatever toolkit you want through a foreign function interface.

        ``-You don't need threads -or- you have the $3000 bucks for a commercial license.'' ...or your implement
    • by Miraba ( 846588 )
      Hence his comment about PhDs not being suited for the work involved - he has direct experience.
  • 11! (Score:2, Funny)

    Nigel Tufnel: The numbers all go to eleven. Look, right across the board, eleven, eleven, eleven and... Marty DiBergi: Oh, I see. And most amps go up to ten? Nigel Tufnel: Exactly. Marty DiBergi: Does that mean it's louder? Is it any louder? Nigel Tufnel: Well, it's one louder, isn't it? It's not ten. You see, most blokes, you know, will be playing at ten. You're on ten here, all the way up, all the way up, all the way up, you're on ten on your guitar. Where can you go from there? Where?
  • by NetDanzr ( 619387 ) on Monday October 02, 2006 @12:36PM (#16278499)
    I used to work for a major US research university in their commercialization department. We were the guys who pitched ideas to venture capitalists, wrote business plans and tried to keep the inventors down to earth. I fully agree with what was said in the article, especially how important is to know your customers, but I'd like to add a few points:

    • Sales team. The first person you'll ever need is the VP for sales. Then you'll need a good, experienced sales team. No matter how expensive they are, these people will make or break a business. I ended up leaving my job and joining a startup precisely for this reason.
    • Time frame and financial needs. One thing all startups underestimate is the need for quality assurance. Generally, testing for defects takes more time than assembling a product. Thus, the time to market should be at least tripled and the cost doubled from what you expect.
    • Intellectual property. True, patent protection is overrated. However, there are thousands of inventors and companies waiting to sue your ass off if you infringe on their patents. More important than filing your patent is to research whether you infringe on others' patents or not, and settle any licensing issues. This will get very costly, and in this case getting good lawyers is worth their weight in gold. We pay roughly $5000 per patent examined, but they decreased the number of patents we thought we would license from 40 to 2.
    • Company share. Many inventors don't want to relinquish control over the company, and want to maintain a majority stake at any cost. Most investors wouldn't agree with that, with a good reason - a researcher running a company is recipe for disaster. And as the classic saying goes, it's better to have 5% of $100 million than 100% of nothing.
    • IP ownership. I talked about infringing on others' IP already, but what about the inventor's IP? The inventor must transfer all the rights to the invention to the company. Otherwise, the inventor will exercise undue influence over the business, and sooner or later (rather sooner) this will create conflicts between the inventor and the management.
    There are plenty more rules of the game, but this game is too flexible to make any of them universal. The best thing is to give over your technology to a seasoned entrepreneur and just ride along.
    • by ajakk ( 29927 ) on Monday October 02, 2006 @01:07PM (#16279053) Homepage
      Good list. On the IP front, the article made one very stupid comment:
      "Patent protection does serve one useful purpose: it can make investors feel warm and fuzzy, especially naive investors. But I strongly recommend that you do your own patent filings. It's not hard to do once you learn how (get the Nolo Press book "Patent it Yourself"). You'll do a better job than most patent attorneys and save yourself a lot of money."
      I am a patent litigator, and I would LOVE to defend someone from infringement based upon a patent that was written pro se. While I agree that the Nolo book is one of the best, don't file anything other than a provision patent application yourself. The filing of a provisional will give you 1 year to market your application to VCs and other investors before having to lay out the money for a real application. A quality patent prosecutor is worth their weight in gold if you ever plan on licensing or litigating the patent, and good prosecutors are not that much more expensive over the course of the application than cheap fly-by-nighters.
    • Thus, the time to market should be at least tripled and the cost doubled from what you expect.

      Very close... however, all good engineers with program management experience know that actual cost = estimated cost * pi.

    • # Sales team. The first person you'll ever need is the VP for sales. Then you'll need a good, experienced sales team. No matter how expensive they are, these people will make or break a business.

      Or they'll do both. They'll sell what doesn't exist in order to get the business going, and the development team will have to try and keep up. You will succeed, as long as the development team can do this. But you will reach a point where you grow a little bit too quickly, and sales starts to promise too much

  • Patent Protection (Score:2, Interesting)

    I particularly liked #3. I was always told that - "If you don't go right out and patent your idea, someone will up and steal it right out from under you."

    But he just reiterates what I've read in many other places (although he puts a different spin on it).

    I've read that you are essentially protected, as an inventor, by the act of inventing. You have created the work on which other things may try to be based, but you are protected by virtue of the fact that you first created it. The patent puts some extra

    • Re: (Score:3, Informative)

      by ajakk ( 29927 )
      You are wrong. You are confusing copyright protection with patent protection. As an author, you automatically receive copyright protection for any work that you create. However, you can file for a registered copyright that will give you greater teeth to enforce your copyright. Copyrights, however, only protect the artistic embodiment of an idea (say the source code for a program) and not the idea itself. The cost of getting a registered copyright is minimal ($40). Patent protection only comes from fili
  • Someone explain the dept tag? Who or what is "Kari"?
  • As someone else said, entrepreneurs have different goals than venture capitalists.

    Build something or sell a service you like. Don't base the product on *just* you and your buddies, but if you do no like what you are making or providing, you'll hate yourself. Feeling good about yourself and having someplace worth going to every morning is worth much more than getting rich from an IPO. There will be plenty of opportunities to do something you don't like even when making a product you love. One of the best thi
    • Re: (Score:3, Insightful)

      by WasterDave ( 20047 )
      One of the best things about having your own business is that you can walk away.
      Unless you have investors in which case, at least ethically, you're locked in for the ride. Note that this can mean five or ten years in a "zombie" company struggling along. Even if you think your next big idea is the shit, you still get to deal with a product nobody wants and the tech support nightmare you created for yourself because you took the kings' shilling while it seemed like a good idea.

      Word to the wise: sometimes fai
  • I think most of these myths are right on the money. It has always amazed me, for example, how many people have foolishly thought that a mere [untested, undeployed] idea could be relatively valuable. And I've often felt that patents are like viagra for investors... ultimately they may be unenforcable, but if you can attract some dumbass investor on the premise that you own "intellectual property" you can cash in.

    Most of the dot com failures can be directly attributed to people beliving many of these myths.
  • In bussiness, all rules and ideas have exceptions, all of them!
    Humans are contradictory in nature, hence bussiness too.
    It reminds me of a quote from the Simposons.
    Judge: Lisa Simpson, for lying under oath I sentence you to life in exile in Monster Island.
    (Judge whispers)don't worry the existence of Monster Island is a myth.
    -Lisa running away from Godzilla and Mothra through the Jungle -
    Lisa: I though that Monster Island was a myth!
    Person running away: Actually Monster Island is a peninsula!

    The only myth is
    • The only myth is that in a world were people live in extreme poverty a profit driven society is morally acceptable.

      O...k.... then. As a newly enlightened member of the prolitereate I would like to subscribe to your newsletter -- I find your ideas intriguing.

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