I had been on the business side in big companies, successfully negotiating revenue generating contracts and building out web solutions, understanding the business needs from BBN/GTE Internetworking.
I had first moved from Engg to build the Web Group of BGS Systems (now BMC Software) in 96, by understanding their business pain of shipping tapes for each beta release and setup digital download of software with reporting to allow customers to install new releases and report bugs and tied field services to engineering reducing sales cycles.
In fact, I took pride in the fact that I understood technology and business well.
But, the real truth was that I seriously lacked business experience as an enterpreneur when I started with Coola after all this! Well, I didn't know it right away, I market validated and learnt on the job, the hard way.
Building a business from concept takes a different kind of business skill than what is required in a job. In an existing company, you know the customers, marketing channels are in place to reach the customers, you are in a position of power to negotiate contracts in large companies.
When you take a concept to build a business, you are alone, face it, all alone! Its a matter of perspective whether you sweat about it or think you have something unique and feel great about it.
For tech companies, technology and the business problem solved are so intertwined. If you have experience in a particular vertical and see a problem and dream a technology solution to it, you have crossed the first hurdle. My friend Sandeep Shah built Skyscape like that and its is a triving success story today.
But for the most part, I see tech enterpreneurs come up with a technology and think it will solve a problem for some particular segment, which may or may not be true. In fact,enterpreneurs believe too strongly on the viability of consumer ideas thinking of themselves as customers. I have repeated this error more than once.
I have come to believe that web consumers are too spoilt to pay. Even for acompelling business where they would pay, its too expensive (like Amazon) to build a brand and reach them.
So, the best way to find your customer potential is to insert your business into the existing ecosystem of businesses. Find an existing segment of business who would pay. Please, please, do not read this enterprise market instead of consumer.
Its practically executable for you the enterpreneur to reach an existing business and make it easy for the business by getting them the rare segment of consmers they cannot reach or by optimizing some business process by which they can skip a middleman and save money and pay you instead.
Having said that, how can one develop that skill? I am a big believer of learning anything at any age if you have the burning desire and the right attitude.
One way is to go about practising it before you need it. We all go through life wanting to become an enterpreneur for some time before we hit about the idea and have the life support to make it happen. So practice on everything you see around you.
I grewup in a household of CPAs who would look at any vendor and try to guess what his business breakeven point is. So, we can practise the same for every business we see around us or dream up imaginary ones and practise.
For example, you give your shirt for drycleaning. Look at the drycleaner with enterpreneurial eyes. If it were your business, how would you bring in customers, does he/she have a specific profile of customers, where do you see their major costs are ....
I saw a friend move and collected diaper boxes from everyone saying its perfect for packing. I see that as an opportunity to evaluate an hypothetical business viability. Can you make a business collecting a bunch of diaper boxes which seems around in many households and rent it out for a fee to movers. You can start small and spread the word to build customers. Ah! looks like a great business as you can reuse the same boxes if you collect them back after each move.
But wait, the more you think about it, it becomes clear, the real cost is in accumulating the boxes for sale and spreading the word around to people to give it to you. No business here!
Most of us dream up the potetential of sales and see the demand so easily for our ideas that we forget that we need to start from the cost of getting the customers and their real pain to come to us.
Saturday, July 01, 2006
Thursday, June 22, 2006
Secrets to contact strangers and ask for funding
I spoke to 120 people in 40 days during my initial funding and thought I should share some secrets as I hear from smart people wondering how to get started asking strangers for money.
First, yes, YOU can do it, its better if you haven't done it before.
The first step of waking the entrepreneur in you is to be able to communicate your passion about your idea to others. Its like a first time newborns parents who can talk excitedly about their baby to strangers. It will come naturally if you don't stop to think about it.
Ok, you have stopped to think about it, so lets get a plan in place.
1. Start with people who you think you can trust and pitch your idea. Hear their comments, as best as possible without taking all criticism to heart.
This should help you through the process of validating whether you have a unique idea. Try this on as many people who are willing to hear it. This is also your practice session to get to explain the idea in simple words in less than a minute such that it explains the uniqueness of your idea and your passion.
2. First focus on validating whether the problem your idea solves really exists. In other words, market validate the solution for an existing problem in a vertical. Its easy to focus on how cool your technology will be, especially for tech ideas. Remember, you are out to build a business, and make money so focus on the problem you are solving for customers.
3. You may soon pitch your idea to get advisors, investors, hire the best talents and to companies to become your customers and partners. So, don't worry about investors yet. Everyone of them is a person. So practice your pitch on everyone who will listen. Its your lesson in gauging people's interest, their nuances in giving you feedback, your persuasiveness in getting them to see the vision you are painting.
The real success of an entrepreneur finally lies in being able to discern people - separating the good from the bad, separating good intensions from real capabilities, separating people who just want to talk from those who want to do.
4. Go to networking events; share your idea with several people. Meeting fellow entrepreneurs will help benchmark how far you are in the process, learn the good and bad you have to do and avoid. It will build friendships that will help with referrals and validations later.
5. I see a lot of entrepreneurs seeking investors and trying to smooze with them and trying to befriend them. This is painfully obvious in a panel, where the usual format is to see an entrepreneur flanked between two VCs. I don't know a single case of a VC funding an entrepreneur simply for sucking up to them.
Investors are real people. They are seasoned at spotting an entrepreneur who has a real money making proposition and shows the confidence to execute on it. Your confidence will show when you get there.
So, first focus on finding your first customer.
These people will also be at networking events. You can find referrals to companies at events from fellow entrepreneurs. Don't hesitate to call or email them. I spent bulk of my early days talking to potential customers to market validate my idea. They may surprise you and respond more favorably than you think. You'll never know till you try. This will also help you understand what is doable and what is futuristic.
6. Pitching to customers is a different game. Till now, you have been talking about your idea from your perspective. Now you need to pitch it from this particular customer view point of 'Whats in it for them".
In early Coola days, we pitched to several segments and always made a screen shot of what it would look like on their web site to use Coola. We setup demos specifically applying to their type of data and mobility problem.
This helped me understand the problem better and talk from their point of view.
7. I'd suggest never to stop talking to customers from this point on. Find the segment that easy to penetrate for YOU, the ones where you can get started.
I called pure strangers and found customer prospects before funding. But after funding one of my advisors told me an obvious truth, kept as a well-guarded secret by entrepreneurs.
“Your first paying customer is not going to be a stranger. It has to be someone who is ready to bet their job to trust you personally to go up to his/her boss to justify spending real money on a non-existent or brand new company that has no guarantees of survival next year".
In a software play, there are contractual ways to get around it by offering exit and merger clauses offer source code in case your company closed down.
Just remembering that you are dealing with real people, with real jobs will give you perspective in getting ready to network and sell your idea to your first customer.
One option is to go about the rounds getting validation that the need is real and they could be a potential customer before your funding cycle. Another option is to work hard to get a paid pilot deal with your first customer, which can serve as validation and get your seed money too.
8. Find advisors along the way who can guide you through the process. These can be strangers. Successful entrepreneurs who have sold their companies and are working in a large company are ideal people who are likely to understand your position and will help you.
I've written before about why you need advisors and compensation etc.
You just need that one person who you can trust. If you truly believe you have this great idea to change the world, be proud of asking people to be part of it.
One common question new entrepreneurs have is "how can I just ask someone to be my advisor? What does it mean? What am I offering?".
When you find the right person you can ask them to be your advisor. Find out the best mode of communication that works for them and stay in touch. Take their advice and move ahead on next steps and keep them posted on your learning and progress.
If your personalities do not work out, tell them politely and drop them. Its common to learn after your networking round that this advisor was not the best advisor for the long-term. So, don't make commitments of payments or add their names to your business plan too soon. Treat them as a new friend and keep them posted and take it from there.
9. Finally you get to the investors. Early on, find investors and ask for their advice and see what objections they raise. Do your homework on the investor that fits your type of business and stage of company and get a referral through their trusted network when you are ready. Before that as you network, setup meeting with investors to showcase your idea and get advice. They bring years of experience making comparables to business ideas being pitched to them.
At best, you'll learn a lot about potential blind spots, companies that sound like your competition just by the way you pitch your idea.
Later on, media will judge you the same way as investors by quickly trying to place you in the overall market. So, at best, your investor meetings should give you feedback on your pitch (wordings, tone, style and succinct meaning) and feedback on your business model and customer pain. You can gain valuable insight into execution details of scaling your business into your vertical.
But, remember, investors are real people. I heard from an honest VC from Fidelity Ventures who told me early on during my "meet me for advice" rounds, that he is doing a job. Will my company offer the level of comfort for him to go to his other partners and stage his career to bet that we will survive and guarantee the return on investment that the VC fund has promised its investors?
It sounds the same as the concern of the first customer right?
That’s why VCs prefer entrepreneurs who have successfully built and exited out of companies. They follow others in their network who are betting on some new technology. They like some fundamental technology which appears at worse as a potential candidate that can easily be sold to several companies, e.g., tool players.
10. The only caveat at a VC meeting is that they do not know if you are winning guy or girl as much as they do not know that you are likely to fail.
So, in the initial rounds, I'd suggest not meeting VCs in their offices. Meet them as real people at breakfast and ask for advice. Be open to hear the advice and take it in perspective and see what you need to fix to make your business plan reduce risk towards success.
I used to be available to meet investors at 30 minute notice locally and next day anywhere in America. I used to send a follow-up up email that night (however late). I made sure I got something out of my meeting with every person I met.
If you like the investor, follow-up after you have made fixes be it rounding off team or customer validation. Do not loop around just adding more features to your product. Think of your job as being to pitch to investors and get the money and hire the team who will build the product.
After this stage, nobody will look like a stranger, everyone will look like a potential person who can help your company grow :-)
First, yes, YOU can do it, its better if you haven't done it before.
The first step of waking the entrepreneur in you is to be able to communicate your passion about your idea to others. Its like a first time newborns parents who can talk excitedly about their baby to strangers. It will come naturally if you don't stop to think about it.
Ok, you have stopped to think about it, so lets get a plan in place.
1. Start with people who you think you can trust and pitch your idea. Hear their comments, as best as possible without taking all criticism to heart.
This should help you through the process of validating whether you have a unique idea. Try this on as many people who are willing to hear it. This is also your practice session to get to explain the idea in simple words in less than a minute such that it explains the uniqueness of your idea and your passion.
2. First focus on validating whether the problem your idea solves really exists. In other words, market validate the solution for an existing problem in a vertical. Its easy to focus on how cool your technology will be, especially for tech ideas. Remember, you are out to build a business, and make money so focus on the problem you are solving for customers.
3. You may soon pitch your idea to get advisors, investors, hire the best talents and to companies to become your customers and partners. So, don't worry about investors yet. Everyone of them is a person. So practice your pitch on everyone who will listen. Its your lesson in gauging people's interest, their nuances in giving you feedback, your persuasiveness in getting them to see the vision you are painting.
The real success of an entrepreneur finally lies in being able to discern people - separating the good from the bad, separating good intensions from real capabilities, separating people who just want to talk from those who want to do.
4. Go to networking events; share your idea with several people. Meeting fellow entrepreneurs will help benchmark how far you are in the process, learn the good and bad you have to do and avoid. It will build friendships that will help with referrals and validations later.
5. I see a lot of entrepreneurs seeking investors and trying to smooze with them and trying to befriend them. This is painfully obvious in a panel, where the usual format is to see an entrepreneur flanked between two VCs. I don't know a single case of a VC funding an entrepreneur simply for sucking up to them.
Investors are real people. They are seasoned at spotting an entrepreneur who has a real money making proposition and shows the confidence to execute on it. Your confidence will show when you get there.
So, first focus on finding your first customer.
These people will also be at networking events. You can find referrals to companies at events from fellow entrepreneurs. Don't hesitate to call or email them. I spent bulk of my early days talking to potential customers to market validate my idea. They may surprise you and respond more favorably than you think. You'll never know till you try. This will also help you understand what is doable and what is futuristic.
6. Pitching to customers is a different game. Till now, you have been talking about your idea from your perspective. Now you need to pitch it from this particular customer view point of 'Whats in it for them".
In early Coola days, we pitched to several segments and always made a screen shot of what it would look like on their web site to use Coola. We setup demos specifically applying to their type of data and mobility problem.
This helped me understand the problem better and talk from their point of view.
7. I'd suggest never to stop talking to customers from this point on. Find the segment that easy to penetrate for YOU, the ones where you can get started.
I called pure strangers and found customer prospects before funding. But after funding one of my advisors told me an obvious truth, kept as a well-guarded secret by entrepreneurs.
“Your first paying customer is not going to be a stranger. It has to be someone who is ready to bet their job to trust you personally to go up to his/her boss to justify spending real money on a non-existent or brand new company that has no guarantees of survival next year".
In a software play, there are contractual ways to get around it by offering exit and merger clauses offer source code in case your company closed down.
Just remembering that you are dealing with real people, with real jobs will give you perspective in getting ready to network and sell your idea to your first customer.
One option is to go about the rounds getting validation that the need is real and they could be a potential customer before your funding cycle. Another option is to work hard to get a paid pilot deal with your first customer, which can serve as validation and get your seed money too.
8. Find advisors along the way who can guide you through the process. These can be strangers. Successful entrepreneurs who have sold their companies and are working in a large company are ideal people who are likely to understand your position and will help you.
I've written before about why you need advisors and compensation etc.
You just need that one person who you can trust. If you truly believe you have this great idea to change the world, be proud of asking people to be part of it.
One common question new entrepreneurs have is "how can I just ask someone to be my advisor? What does it mean? What am I offering?".
When you find the right person you can ask them to be your advisor. Find out the best mode of communication that works for them and stay in touch. Take their advice and move ahead on next steps and keep them posted on your learning and progress.
If your personalities do not work out, tell them politely and drop them. Its common to learn after your networking round that this advisor was not the best advisor for the long-term. So, don't make commitments of payments or add their names to your business plan too soon. Treat them as a new friend and keep them posted and take it from there.
9. Finally you get to the investors. Early on, find investors and ask for their advice and see what objections they raise. Do your homework on the investor that fits your type of business and stage of company and get a referral through their trusted network when you are ready. Before that as you network, setup meeting with investors to showcase your idea and get advice. They bring years of experience making comparables to business ideas being pitched to them.
At best, you'll learn a lot about potential blind spots, companies that sound like your competition just by the way you pitch your idea.
Later on, media will judge you the same way as investors by quickly trying to place you in the overall market. So, at best, your investor meetings should give you feedback on your pitch (wordings, tone, style and succinct meaning) and feedback on your business model and customer pain. You can gain valuable insight into execution details of scaling your business into your vertical.
But, remember, investors are real people. I heard from an honest VC from Fidelity Ventures who told me early on during my "meet me for advice" rounds, that he is doing a job. Will my company offer the level of comfort for him to go to his other partners and stage his career to bet that we will survive and guarantee the return on investment that the VC fund has promised its investors?
It sounds the same as the concern of the first customer right?
That’s why VCs prefer entrepreneurs who have successfully built and exited out of companies. They follow others in their network who are betting on some new technology. They like some fundamental technology which appears at worse as a potential candidate that can easily be sold to several companies, e.g., tool players.
10. The only caveat at a VC meeting is that they do not know if you are winning guy or girl as much as they do not know that you are likely to fail.
So, in the initial rounds, I'd suggest not meeting VCs in their offices. Meet them as real people at breakfast and ask for advice. Be open to hear the advice and take it in perspective and see what you need to fix to make your business plan reduce risk towards success.
I used to be available to meet investors at 30 minute notice locally and next day anywhere in America. I used to send a follow-up up email that night (however late). I made sure I got something out of my meeting with every person I met.
If you like the investor, follow-up after you have made fixes be it rounding off team or customer validation. Do not loop around just adding more features to your product. Think of your job as being to pitch to investors and get the money and hire the team who will build the product.
After this stage, nobody will look like a stranger, everyone will look like a potential person who can help your company grow :-)
Getting that first meeting in your networking rounds
I made this list as I wrote My secrets to Contact Strangers and Ask for Funding"
Heres what I did to make those initial contacts:
a) Attend networking events where you know your potential candidate is likely to be present.
b) Ask around, ask anyone. You'll be surprised when you put your mind to it, how many people you really know and how many know investors and advisors who can help.
c) Be persistent. Call or email people. Do not leave repeat voicemails for people. Try them till you get them. When you do, be courteous of whatever is keeping them busy and ask for a convenient time to call them back.
d)Follow-up diligently. Focus on the points they liked and what you are ready to change. Give them credit for ideas and they are likely to take ownership for it and support it. For example, if someone suggests that you try a new vertical, update them on progress of your calls to customers in that segment. They are likely to suggest more referrals and take you around.
I 've made it a habit to update people who helped me. I ry to send emails closer to when I believe they are likely to read it. So, if the person reads on a blackberry, send a meaningful short subject and 1 liner. If its a west coast person, write it in east coast morning so they get it as one of the first emails. Always remember them as busy people.
e) Do your homework. Today it’s easy to Google people and find their interest and background more than when I raised money in 99. You can read people's blog and know more of the real person. Then find the people you think who can help your business.
The first advisor I met was a famous, busy CEO. You'll be surprised how many CEOs read their own emails. I emailed him and he said he was too busy to meet me. I found he was speaking at a conference out of town and emailed again with the header "I'll drive you to the airport". I actually had thought through a working plan in case he agreed to it. Of course I met him at work next day. He is my inspiration to find time to help entrepreneurs today.
f) Understand the ecosystem of your business - who are the players - competitors, substitutes, who can easy move into your space, who are potential buyers, who are influential people in media, on boards of companies, current investors, famous people working in those companies etc.
Your business has the best chance of success if you are positioned well in that ecosystem. That’s one reason you see web companies offering APIs for others to build upon them and many small companies tout their large partners names.
Remember, everyone is a real person. Find them and reach them as real people. I have tracked where people spoke and followed up instead of random networking events. Many may not be as helpful or knowledgeable as you may assume, but you'll never know if you don't try.
g) I recently heard a VC mention at BarCamp Boston refering to entrepreneurs of web 1.0 companies as "scarred and having learnt capital efficiencies". He made a positive reference to such enterpreneuers. It made me realize this important point. When you meet investors, whatever you outcome, remember its a person, do not take an attitude of us vc them. It will help neither the investor nor you. I think serial enterpreneurs have experience, but its the attitude that always counts.
So, keep an open attitude , remember Colin Powel's quote " Don't carry your job too close to yourself to make it part of your identity". For enterpreneurs, its important not to get their companies so close to heart to become negative about the experience of meeting all sorts of people during the networking rounds.
h) Learn to project your contagious enthusiasim about your business details and everyone will want to talk to you.
Just remember, if you have a real solution to a real problem for a set of people who have money to pay for it, you have great potential. Every idea in the hands of different entrepreneurs makes different companies based on how they execute.
So, go about your networking with a clear plan, with respect and clear accountability for your time and you'll see yourself grow to a great entrepreneur.
Heres what I did to make those initial contacts:
a) Attend networking events where you know your potential candidate is likely to be present.
b) Ask around, ask anyone. You'll be surprised when you put your mind to it, how many people you really know and how many know investors and advisors who can help.
c) Be persistent. Call or email people. Do not leave repeat voicemails for people. Try them till you get them. When you do, be courteous of whatever is keeping them busy and ask for a convenient time to call them back.
d)Follow-up diligently. Focus on the points they liked and what you are ready to change. Give them credit for ideas and they are likely to take ownership for it and support it. For example, if someone suggests that you try a new vertical, update them on progress of your calls to customers in that segment. They are likely to suggest more referrals and take you around.
I 've made it a habit to update people who helped me. I ry to send emails closer to when I believe they are likely to read it. So, if the person reads on a blackberry, send a meaningful short subject and 1 liner. If its a west coast person, write it in east coast morning so they get it as one of the first emails. Always remember them as busy people.
e) Do your homework. Today it’s easy to Google people and find their interest and background more than when I raised money in 99. You can read people's blog and know more of the real person. Then find the people you think who can help your business.
The first advisor I met was a famous, busy CEO. You'll be surprised how many CEOs read their own emails. I emailed him and he said he was too busy to meet me. I found he was speaking at a conference out of town and emailed again with the header "I'll drive you to the airport". I actually had thought through a working plan in case he agreed to it. Of course I met him at work next day. He is my inspiration to find time to help entrepreneurs today.
f) Understand the ecosystem of your business - who are the players - competitors, substitutes, who can easy move into your space, who are potential buyers, who are influential people in media, on boards of companies, current investors, famous people working in those companies etc.
Your business has the best chance of success if you are positioned well in that ecosystem. That’s one reason you see web companies offering APIs for others to build upon them and many small companies tout their large partners names.
Remember, everyone is a real person. Find them and reach them as real people. I have tracked where people spoke and followed up instead of random networking events. Many may not be as helpful or knowledgeable as you may assume, but you'll never know if you don't try.
g) I recently heard a VC mention at BarCamp Boston refering to entrepreneurs of web 1.0 companies as "scarred and having learnt capital efficiencies". He made a positive reference to such enterpreneuers. It made me realize this important point. When you meet investors, whatever you outcome, remember its a person, do not take an attitude of us vc them. It will help neither the investor nor you. I think serial enterpreneurs have experience, but its the attitude that always counts.
So, keep an open attitude , remember Colin Powel's quote " Don't carry your job too close to yourself to make it part of your identity". For enterpreneurs, its important not to get their companies so close to heart to become negative about the experience of meeting all sorts of people during the networking rounds.
h) Learn to project your contagious enthusiasim about your business details and everyone will want to talk to you.
Just remember, if you have a real solution to a real problem for a set of people who have money to pay for it, you have great potential. Every idea in the hands of different entrepreneurs makes different companies based on how they execute.
So, go about your networking with a clear plan, with respect and clear accountability for your time and you'll see yourself grow to a great entrepreneur.
Friday, June 16, 2006
Funding as way of life
For an entreprenuer funding is not a one time or 2-time process. Most first time entreprenuers think of funding as a one-time distruption in their dreams to their startups. It will help to think of a business as a separate entity with clear goals and funding as a resource you feed in to create more value. Then, we can see it as an ongoing process to scale the company even after you are cash-flow positive with paying customers.
I was introduced to VCs and funding first, during my corporate life at $2 billion Harcourt, the Education Publishing company where I was a Director who built out Harcourt.com in early 99 just before I started my first startup.
I had built the initial harcourt.com by integrating 27 business units, and we were brainstorming about making a new online business targeting families of kids giving them education content from Harcourts divisions and planned to make our parent company a minority stakeholder and bring in local VCs for investment. It is common for corporate entreprenuers, especially in east coast to bring in VCs for investments to spinoff a business unit.
Later, at my startup Coola, I raised Series A as a first time entrepreneur and later Series B as an existing startup.
My friend Hemang Dave a true serial entrepreneur, started several companies for CMGI, the famous incubator of early 90s. He specialized in raising capital. So, he always started a technology company, then raised venture capital money to buy a related business and put them together to scale his company to a new business. He grew by aquisitions and sold his compainies to a large buyer. He is a VC now, his last company started out as training net that become THINQ, the learning platform company, which he sold to Saba systems
This is a good strategy to scale a startup during second round funding, only when it makes business sense for YOU!
Coola was compared with Syncplicity from the company Cognitive Roots, the file scraping software company, when we launched "Right-Click" to help create Coolets of information to sync to Palm apps using Coola. We were an early stage company with 6 or 10 people and Syncplicity was two guys out of NY.
Some investors suggested that we "acquire" Syncplicity and that would make a good story to show how we would use our funding money and can raise our Series B funding.
Well, I visited Syncplicity founder, a spirited, self-funded entreprenuer and decided we were complementary businesses and we could work well together as they agreed to integrate Coola API in their next release . We did not distract ourself with any merger. I had learnt from my infospace deal and VC fundng story from my Series A.
Nate, the Cognitive Roots founder's comments when we closed Coola, echos my belief that your integrity as a person matters most, and will come around to you in this same ecosystem of startup world.
I was introduced to VCs and funding first, during my corporate life at $2 billion Harcourt, the Education Publishing company where I was a Director who built out Harcourt.com in early 99 just before I started my first startup.
I had built the initial harcourt.com by integrating 27 business units, and we were brainstorming about making a new online business targeting families of kids giving them education content from Harcourts divisions and planned to make our parent company a minority stakeholder and bring in local VCs for investment. It is common for corporate entreprenuers, especially in east coast to bring in VCs for investments to spinoff a business unit.
Later, at my startup Coola, I raised Series A as a first time entrepreneur and later Series B as an existing startup.
My friend Hemang Dave a true serial entrepreneur, started several companies for CMGI, the famous incubator of early 90s. He specialized in raising capital. So, he always started a technology company, then raised venture capital money to buy a related business and put them together to scale his company to a new business. He grew by aquisitions and sold his compainies to a large buyer. He is a VC now, his last company started out as training net that become THINQ, the learning platform company, which he sold to Saba systems
This is a good strategy to scale a startup during second round funding, only when it makes business sense for YOU!
Coola was compared with Syncplicity from the company Cognitive Roots, the file scraping software company, when we launched "Right-Click" to help create Coolets of information to sync to Palm apps using Coola. We were an early stage company with 6 or 10 people and Syncplicity was two guys out of NY.
Some investors suggested that we "acquire" Syncplicity and that would make a good story to show how we would use our funding money and can raise our Series B funding.
Well, I visited Syncplicity founder, a spirited, self-funded entreprenuer and decided we were complementary businesses and we could work well together as they agreed to integrate Coola API in their next release . We did not distract ourself with any merger. I had learnt from my infospace deal and VC fundng story from my Series A.
Nate, the Cognitive Roots founder's comments when we closed Coola, echos my belief that your integrity as a person matters most, and will come around to you in this same ecosystem of startup world.
Tuesday, June 13, 2006
Money is money right? No, bad money stings!
I have been talking to people recently, following Barcamp Boston, about my initial days of first round of funding. So its time to talk about my bad money experience :-)
When enterpreneurs start out the first time, they see all money as good money. Some stop to think whether they want to raise angel money vs VC money. In all these, there is good money and bad money.
My first round money was good money, infact great money, Second round was bad money.
Good Money is:
- Money from investors with a strategic fit to your business. This means money from people who can help grow your business, people who have experience and contacts in certain verticals that can help your business.
I got some money from a Director from Amazon, GM of Intuit, Director from Exodus, who were all good people who were excited about my company and willing to help me.
-Money from people who will guide you as advisors to grow your company.
All my select angel investors were true angels who guided me. Again, its not about their brandname, but your mutual respect to work together.
-Money from geographical areas that help your business.
My lead VC was from west coast while we were based out of east coast. So that helped reach companies for partnerships and lead to VCs at next round.
- You do not want small change from several wealthy angels who do not understand your business.
I had some money from a financial planner. When things went south he was the first to be worried. In all fairness, I had to spend time to keep him updated on my decisions. Think of "being your own boss"! I have a friend who raised $2 million from an angel group of 30 wealthy doctors etc and spent a day every month updating them.
In fact there are several consultants who would get you your first $250K within a week, but its all $10K etc from people unrelated to your business. I have seen this work for another friend who got his first $250K, then went on to raise VC money.
-As best as possible you should raise money from a group of investors who can work well together, be it two VCs or set of angels and VCs.
After I closed on my first $1million, I met Howard Anderson and he said he wanted to invest $1millin more and asked to increase my round and I declined because there was no fit with my led investors. Howard's money would have been good as the lead money.
- Finally comes the terms of the money. What is the catch?
I had a local Boston area VC who looked me in the eye during my second round funding and asked if I would step down as CEO beause he would bring his own guy as CEO. The relationship was not at any stage of respect, I declined to him, was hurt at th anti-feminist sentiments, but I honestly fretted about what I should do purely in the interest of the company. Of course, it was a bait and not real followup so it didn't get me money.
There are some inherent market valuations and percentages that VCs get for different stages of a business. In 2000, companies got 30 and 50 million valuations easily. So, I made the mistake of building product, launching it, building user base (palm users in our case) and initial paying customers, and thought I'd raise next round money to scale the sales team to grow the business. So I went to VCs asking for $15million and got the same polite reasons of grow some more, this or that is missing. Then, I came across a honest VC who said, asking for $15 million implies a valuation of $30 million as a Series B would give VCs 50% of the company. This was early 2001 and since the bust was beginning, VCs were getting cautious of high valuations.
Finally we got our Series B from West coast for $5 pre at 20mill valuation. It was the worst terms possible.
Our terms were such that our VCs get everything if we sell the company within 2 years. Specifically in our business, mobile and wireless were crashing ahead of rest of IT as soon as Palm split as two companies. So it was not sensible to believe we could survive towards an IPO without even finding a buyer for 2 years.
The terms could get more money to the second round of investors while leaving the first round of investors in the same terms as founders. Most VCs act in trusted cirlces and won't let this happen but during the bust times, this was common in the terms.
Again the basics of dealing with real people towards a common vision at the closing of the round is important just to keep it fun through the process and bearable when things get tough.
When enterpreneurs start out the first time, they see all money as good money. Some stop to think whether they want to raise angel money vs VC money. In all these, there is good money and bad money.
My first round money was good money, infact great money, Second round was bad money.
Good Money is:
- Money from investors with a strategic fit to your business. This means money from people who can help grow your business, people who have experience and contacts in certain verticals that can help your business.
I got some money from a Director from Amazon, GM of Intuit, Director from Exodus, who were all good people who were excited about my company and willing to help me.
-Money from people who will guide you as advisors to grow your company.
All my select angel investors were true angels who guided me. Again, its not about their brandname, but your mutual respect to work together.
-Money from geographical areas that help your business.
My lead VC was from west coast while we were based out of east coast. So that helped reach companies for partnerships and lead to VCs at next round.
- You do not want small change from several wealthy angels who do not understand your business.
I had some money from a financial planner. When things went south he was the first to be worried. In all fairness, I had to spend time to keep him updated on my decisions. Think of "being your own boss"! I have a friend who raised $2 million from an angel group of 30 wealthy doctors etc and spent a day every month updating them.
In fact there are several consultants who would get you your first $250K within a week, but its all $10K etc from people unrelated to your business. I have seen this work for another friend who got his first $250K, then went on to raise VC money.
-As best as possible you should raise money from a group of investors who can work well together, be it two VCs or set of angels and VCs.
After I closed on my first $1million, I met Howard Anderson and he said he wanted to invest $1millin more and asked to increase my round and I declined because there was no fit with my led investors. Howard's money would have been good as the lead money.
- Finally comes the terms of the money. What is the catch?
I had a local Boston area VC who looked me in the eye during my second round funding and asked if I would step down as CEO beause he would bring his own guy as CEO. The relationship was not at any stage of respect, I declined to him, was hurt at th anti-feminist sentiments, but I honestly fretted about what I should do purely in the interest of the company. Of course, it was a bait and not real followup so it didn't get me money.
There are some inherent market valuations and percentages that VCs get for different stages of a business. In 2000, companies got 30 and 50 million valuations easily. So, I made the mistake of building product, launching it, building user base (palm users in our case) and initial paying customers, and thought I'd raise next round money to scale the sales team to grow the business. So I went to VCs asking for $15million and got the same polite reasons of grow some more, this or that is missing. Then, I came across a honest VC who said, asking for $15 million implies a valuation of $30 million as a Series B would give VCs 50% of the company. This was early 2001 and since the bust was beginning, VCs were getting cautious of high valuations.
Finally we got our Series B from West coast for $5 pre at 20mill valuation. It was the worst terms possible.
Our terms were such that our VCs get everything if we sell the company within 2 years. Specifically in our business, mobile and wireless were crashing ahead of rest of IT as soon as Palm split as two companies. So it was not sensible to believe we could survive towards an IPO without even finding a buyer for 2 years.
The terms could get more money to the second round of investors while leaving the first round of investors in the same terms as founders. Most VCs act in trusted cirlces and won't let this happen but during the bust times, this was common in the terms.
Again the basics of dealing with real people towards a common vision at the closing of the round is important just to keep it fun through the process and bearable when things get tough.
Thursday, June 08, 2006
BarCamp Boston - a conference with enterpreneurial energy
Loved BarCamp Boston, learnt a lot from several sessions, but best of all was the enterpreneurial energy!
Monster Lab, the sponsors, were great, and true to the unconference, they did not market their wares but helped a lot with food, organization and friendly smiles.
I'll write about the various enterpreneuers and what I liked in the coming days.
I loved Ray Deck's talk about bootstrapping and want to write about it here.
Ray is a modest serial enterprenuer since 97 on his 4th startup element55.com
Bootstrapping means putting ones one money to get a startup funded for most people. I remember my early days after college when I was involved in Bootstrapping OS, particularly, in Sequoia systems with fault tolerant proprietary OS.
Many enterpreneurs I speak to on a daily basis have one thing in common - for them bootstapping is to get started, but they have nowhere to pass the funding of their startups to. So they loop for a long time spending their own monies building their business looking for funding to scale it to next level.
I like two things about Ray's presentation:
1. Very logical layout of a business in terms of its components with practical advice for the new enterpreneuer
2. Very positive presentation focusing on answers
3. Clearly brought out the opportunity cost of the founders time which most enterpreneurs forget.
More on these later.
Monster Lab, the sponsors, were great, and true to the unconference, they did not market their wares but helped a lot with food, organization and friendly smiles.
I'll write about the various enterpreneuers and what I liked in the coming days.
I loved Ray Deck's talk about bootstrapping and want to write about it here.
Ray is a modest serial enterprenuer since 97 on his 4th startup element55.com
Bootstrapping means putting ones one money to get a startup funded for most people. I remember my early days after college when I was involved in Bootstrapping OS, particularly, in Sequoia systems with fault tolerant proprietary OS.
Many enterpreneurs I speak to on a daily basis have one thing in common - for them bootstapping is to get started, but they have nowhere to pass the funding of their startups to. So they loop for a long time spending their own monies building their business looking for funding to scale it to next level.
I like two things about Ray's presentation:
1. Very logical layout of a business in terms of its components with practical advice for the new enterpreneuer
2. Very positive presentation focusing on answers
3. Clearly brought out the opportunity cost of the founders time which most enterpreneurs forget.
More on these later.
Tuesday, May 30, 2006
Transition to Startup Life
I find more people dreaming to be enterpreneurs not taking the plunge as they are worried about the transition.
I had worked in large companies for 10 years before my first startup, Coola. I believe I was enterprenurial in my jobs as I worked to bring in web technology and created web organizations in companies I worked. Still it was a job with its own structure and it requires a different competency to evangelize and get buy-ins across different groups working with a team of corporate people hired into a company. I was worried if I could survive on my own as an enterprenuer.
I got a great advice from my best mentor when I was fretting about it, almost ready but not sure whether I could do it. He said "Take a week of vacation, pretend you are already on your own, get up in the morning and do what you would as an enteprenuer, see if you like it, otherwise, forget about it and get back to work in a week". I did just that.
I started planning for this week, began thinking about what I would do during the week and scheduled my time to attend some networking events (ok ok, I thought it was all about networking only and didn't know about the rest of execution), then I took the week off. By the end of the week, I had a taste for what life would be to be on my own.
During the course, I have learnt that you need discipline and planning to manage your time.
All this applies to the very early stages. Once you have your team in place and are building your startup, its a fast pace ride. To quote Jerry Kaplan from Startup "Its like a fast ride on a car down the hill without any brakes on your car".
Its funny, I have driven up I93 into Boston or 101 in CA, rushing to meeting investors and clients and always remember this quote, and can validate the feeling is true whether things are looking up or down.
I had worked in large companies for 10 years before my first startup, Coola. I believe I was enterprenurial in my jobs as I worked to bring in web technology and created web organizations in companies I worked. Still it was a job with its own structure and it requires a different competency to evangelize and get buy-ins across different groups working with a team of corporate people hired into a company. I was worried if I could survive on my own as an enterprenuer.
I got a great advice from my best mentor when I was fretting about it, almost ready but not sure whether I could do it. He said "Take a week of vacation, pretend you are already on your own, get up in the morning and do what you would as an enteprenuer, see if you like it, otherwise, forget about it and get back to work in a week". I did just that.
I started planning for this week, began thinking about what I would do during the week and scheduled my time to attend some networking events (ok ok, I thought it was all about networking only and didn't know about the rest of execution), then I took the week off. By the end of the week, I had a taste for what life would be to be on my own.
During the course, I have learnt that you need discipline and planning to manage your time.
All this applies to the very early stages. Once you have your team in place and are building your startup, its a fast pace ride. To quote Jerry Kaplan from Startup "Its like a fast ride on a car down the hill without any brakes on your car".
Its funny, I have driven up I93 into Boston or 101 in CA, rushing to meeting investors and clients and always remember this quote, and can validate the feeling is true whether things are looking up or down.
Friday, May 26, 2006
Entrepreneurs self managed online community
I am a big fan of online communities.
I founded Web-net, a user group with monthly meetings at Sloan school in 96, in the early days of the web where we invited startups to market validate their ideas. I've been part of an online chat community along with Richard Seltzer with weekly online chats to understand business trends of the web. We've resurrected this as a blogchat with the same interactive netizens.
I talk to about 10 people per month about startup ideas and help make the next step as a followup to this blog. In most cases, I am not the expert, I just think creatively and find the source or contact to help them move ahead.
I am wondering what do people think of building an entreprenuer community online, one that can help each other based on past experience. I recently discovered Gobignetwork.com which is an online community of registered users who can post any question or article.
There are several mailing lists I am part of like Harvard startups, which are very active and have a wealth of accumulated knowledge from the past which is called upon and shared on a daily basis. Like that for entreprenuers, but an online presence!
I am thinking more in the lines of a wiki where its a self managed community.
Let me know your thoughts on this and if you'd like to participate in such a community online.
I founded Web-net, a user group with monthly meetings at Sloan school in 96, in the early days of the web where we invited startups to market validate their ideas. I've been part of an online chat community along with Richard Seltzer with weekly online chats to understand business trends of the web. We've resurrected this as a blogchat with the same interactive netizens.
I talk to about 10 people per month about startup ideas and help make the next step as a followup to this blog. In most cases, I am not the expert, I just think creatively and find the source or contact to help them move ahead.
I am wondering what do people think of building an entreprenuer community online, one that can help each other based on past experience. I recently discovered Gobignetwork.com which is an online community of registered users who can post any question or article.
There are several mailing lists I am part of like Harvard startups, which are very active and have a wealth of accumulated knowledge from the past which is called upon and shared on a daily basis. Like that for entreprenuers, but an online presence!
I am thinking more in the lines of a wiki where its a self managed community.
Let me know your thoughts on this and if you'd like to participate in such a community online.
Saturday, May 06, 2006
Finding the right business model for your technology business
I love this aspect of the early formation stage of any business - finding the right market and b-model for your business.
Is there any steps we can followup?
First, there are lot people who are stragtegists who can come with lot of possibilities. Its a kind of thinking, also coupled with years of experience looking at different business models that worked or failed for other companies in the past. VCs usually do this well, mostly in pointing a parallel business and how a particular b-model failed for someone.
My friend Richard Seltzer is a genius in this, he was an Internet Evangelist (actually that was his title) at Digital when they came up with Altavista. He later wrote the book on "The Altavista Search Revolution". He gets charged about any web idea and can brainstorm wild possibilities.
I've come across many strategists during my early startup days, who were all consultants.
If you look closer, you'll find most of these consultants have certain type of business and b-models that they deep down believe, maybe because it worked for some other client or because of their background.
For example, when we came up with Coola technology as being capable of allowing mobility of granular information between a web based system (over HTTP) and any application on the Palm, coming from a software background, building web applications, I first thought of web businesses as our customers and the optimum deployment as a hosted ASP solution. My partner and CTO has extensive experience in databases and loves integration with different systems in a corporate world. So he build a robust server with its own APIs to integrate into several different type of technologies on the backend.
We came across a VC who had experience in emails who suggested that we offer Coola over email so one can add a Coola signature and get addresses synced into a Palm over Coola. We were driven on an execution spree and managed to implement all of it.
I strongly believe that any business should insert itself into the existing eco-system of players to build some sustainability. So, we partnered with every possible player in the mobile space. We launched an API for our Palm client and worked with every single player to integrate it with their Palm application, eg Palm readers, Palm image viewers, Palm Database Apps all could talk to Coola client on the Palm.
On a sad note, when we closed Coola after 3 years, everyone of them had to release a new version of their software removing Coola client calls :-(
I have seen several clients from BBN Planet/GTE Internetworking where we used to brainstorm with every player who wants to build a web site for their business like Time Warner's American Lawyer Media, Starwood Hotel group, Cabletron etc. Then we built the site, launched, measured results and adviced on keeping on changing the b-model.
So, I have come to appreciate a new way of coming up with business models for new idea which marries strategy with execution.
Here is my first attempt at building a list of consideration to find business models for tech ideas.
1. Ask yourself "what is my fixed and what is my variable" in my business. This will help to understand what is the core part of your business that you want to build as your core IP and competitive advantage in the long run.
For example, if we look at a photo site like shutterfly.com, is their fixed the technology for sharing, operations of printing quality pictures, or the community they built with loyalty to come back as repeat customers.
If they decide the community is their fixed, that will help decide to be a destination site, add the burden of customer aquisitions, and help plan activities around building loyalty to such a community (this part shutterfly hasn't done). If on the other hand they decide their technology and fulfillment is their fixed, they'd work on the UI to lock in visitors (which they've done a beautiful job) and can go about signing partnerships with the portals to do co-branded deals to bring in customers and can even partner with Google groups to allow existing groups to use their site for sharing photos within their community etc.
2. Insert yourself into the existing eco-system. Find partnerships, technology integrations, co-marketing deals, but make sure its all revenue generating for both parties, otherwise it won't stay for long.
If you look closely at the news, you can see how Google became famous because Yahoo chose them as their search engine when Yahoo didn't have one. Today Yahoo and Google are competing for AOL and every other key players partnership to tie themselves some sustainability into the web eco-system.
Beware of revenue sharing deals when you cannot clearly calculate where the revenue is coming from. We had signed for Coola with Boston.com and spent a lot of time with web business who wanted to do rev-share deals when either couldn't see where real money came from.
Its easy to get carried away by examples of large players and how they have grown with revenue share deals, but think critically about the customer paying you, for your small business to you or your partner and why.
3. Every idea given to different teams will make different businesses. It depends on what core competencies exist in your team. Where is your strength? Are you server or client side people? Do you have competency in awesome content play? You can always hire people with other skills, but where is the core of the top guy who is going to drive all this?
4. VCs always ask for a rounded team and beam if you have team and advisors from the vertical you are targeting.
You will have to know the nuances of the vertical you are targeting, so experience in that segment will go a long way. So, even if several verticals are possible when you brainstorm and do a blue-sky scenarios, focus on the one where you have real experience in your team and can execute.
5. If you know your fixed, its great to dream, don't let it hamper your fast executon in the near past.
I love this quote:
" Every morning in the jungle a lion and a gazzelle wake up and start running. The lion will survive only when it runs faster than the slowest gazzelle,a gazzelle will survive only when it can run faster than the fastest lion"
In the startup world, its not the greatest idea that wins, its the one who runs the fastest.
My partner Shirish likes to add puns and extends the quote "Every morning a vulture sleeps late knowing whether the lion or gazzelle survives, it will have some food to eat".
I am yet to see a startup example to see where a business can become a sleeping vulture :-)
Is there any steps we can followup?
First, there are lot people who are stragtegists who can come with lot of possibilities. Its a kind of thinking, also coupled with years of experience looking at different business models that worked or failed for other companies in the past. VCs usually do this well, mostly in pointing a parallel business and how a particular b-model failed for someone.
My friend Richard Seltzer is a genius in this, he was an Internet Evangelist (actually that was his title) at Digital when they came up with Altavista. He later wrote the book on "The Altavista Search Revolution". He gets charged about any web idea and can brainstorm wild possibilities.
I've come across many strategists during my early startup days, who were all consultants.
If you look closer, you'll find most of these consultants have certain type of business and b-models that they deep down believe, maybe because it worked for some other client or because of their background.
For example, when we came up with Coola technology as being capable of allowing mobility of granular information between a web based system (over HTTP) and any application on the Palm, coming from a software background, building web applications, I first thought of web businesses as our customers and the optimum deployment as a hosted ASP solution. My partner and CTO has extensive experience in databases and loves integration with different systems in a corporate world. So he build a robust server with its own APIs to integrate into several different type of technologies on the backend.
We came across a VC who had experience in emails who suggested that we offer Coola over email so one can add a Coola signature and get addresses synced into a Palm over Coola. We were driven on an execution spree and managed to implement all of it.
I strongly believe that any business should insert itself into the existing eco-system of players to build some sustainability. So, we partnered with every possible player in the mobile space. We launched an API for our Palm client and worked with every single player to integrate it with their Palm application, eg Palm readers, Palm image viewers, Palm Database Apps all could talk to Coola client on the Palm.
On a sad note, when we closed Coola after 3 years, everyone of them had to release a new version of their software removing Coola client calls :-(
I have seen several clients from BBN Planet/GTE Internetworking where we used to brainstorm with every player who wants to build a web site for their business like Time Warner's American Lawyer Media, Starwood Hotel group, Cabletron etc. Then we built the site, launched, measured results and adviced on keeping on changing the b-model.
So, I have come to appreciate a new way of coming up with business models for new idea which marries strategy with execution.
Here is my first attempt at building a list of consideration to find business models for tech ideas.
1. Ask yourself "what is my fixed and what is my variable" in my business. This will help to understand what is the core part of your business that you want to build as your core IP and competitive advantage in the long run.
For example, if we look at a photo site like shutterfly.com, is their fixed the technology for sharing, operations of printing quality pictures, or the community they built with loyalty to come back as repeat customers.
If they decide the community is their fixed, that will help decide to be a destination site, add the burden of customer aquisitions, and help plan activities around building loyalty to such a community (this part shutterfly hasn't done). If on the other hand they decide their technology and fulfillment is their fixed, they'd work on the UI to lock in visitors (which they've done a beautiful job) and can go about signing partnerships with the portals to do co-branded deals to bring in customers and can even partner with Google groups to allow existing groups to use their site for sharing photos within their community etc.
2. Insert yourself into the existing eco-system. Find partnerships, technology integrations, co-marketing deals, but make sure its all revenue generating for both parties, otherwise it won't stay for long.
If you look closely at the news, you can see how Google became famous because Yahoo chose them as their search engine when Yahoo didn't have one. Today Yahoo and Google are competing for AOL and every other key players partnership to tie themselves some sustainability into the web eco-system.
Beware of revenue sharing deals when you cannot clearly calculate where the revenue is coming from. We had signed for Coola with Boston.com and spent a lot of time with web business who wanted to do rev-share deals when either couldn't see where real money came from.
Its easy to get carried away by examples of large players and how they have grown with revenue share deals, but think critically about the customer paying you, for your small business to you or your partner and why.
3. Every idea given to different teams will make different businesses. It depends on what core competencies exist in your team. Where is your strength? Are you server or client side people? Do you have competency in awesome content play? You can always hire people with other skills, but where is the core of the top guy who is going to drive all this?
4. VCs always ask for a rounded team and beam if you have team and advisors from the vertical you are targeting.
You will have to know the nuances of the vertical you are targeting, so experience in that segment will go a long way. So, even if several verticals are possible when you brainstorm and do a blue-sky scenarios, focus on the one where you have real experience in your team and can execute.
5. If you know your fixed, its great to dream, don't let it hamper your fast executon in the near past.
I love this quote:
" Every morning in the jungle a lion and a gazzelle wake up and start running. The lion will survive only when it runs faster than the slowest gazzelle,a gazzelle will survive only when it can run faster than the fastest lion"
In the startup world, its not the greatest idea that wins, its the one who runs the fastest.
My partner Shirish likes to add puns and extends the quote "Every morning a vulture sleeps late knowing whether the lion or gazzelle survives, it will have some food to eat".
I am yet to see a startup example to see where a business can become a sleeping vulture :-)
Monday, May 01, 2006
Selling startups - who can help
Selling a startup is a HUGE topic. Lets talk about initial planning steps for selling a startup.
I volunteer as an expert at allexperts.com and answer questions in the VC and Entrepreneur section. Since I answered this same question twice in different context this week, I'd thought I'd share some broker companies I know.
These are companies who have brokers with relationship with buyers and can sell your startup for a fee.
1. CA based Business Team
2. Boston based Boutique firm, specializing in Internet businesses ebizbroker
I recently spoke to a passionate entrepreneur who has a cool startup. He was so focused in his space that, what I saw as potential buyers were not in his radar and he valued his firm much lesser thinking of potential buyers from his industry only.
I'd suggest talking to one of these firms just to check the exit option of your startup. Some can sell technologies from as less as $100K to couple millions $$$.
It may help to see the perspective of some potential buyers. You may be able to get strategic directions to scale your company to increase your valuation by talking to some of these brokers.
Like everything in the startup world, its about relationships. So, meeting a broker before you need one will make them call you with lucrative options when you are not looking, which puts you in the best position to negotiate and get the best offer when you are ready.
I volunteer as an expert at allexperts.com and answer questions in the VC and Entrepreneur section. Since I answered this same question twice in different context this week, I'd thought I'd share some broker companies I know.
These are companies who have brokers with relationship with buyers and can sell your startup for a fee.
1. CA based Business Team
2. Boston based Boutique firm, specializing in Internet businesses ebizbroker
I recently spoke to a passionate entrepreneur who has a cool startup. He was so focused in his space that, what I saw as potential buyers were not in his radar and he valued his firm much lesser thinking of potential buyers from his industry only.
I'd suggest talking to one of these firms just to check the exit option of your startup. Some can sell technologies from as less as $100K to couple millions $$$.
It may help to see the perspective of some potential buyers. You may be able to get strategic directions to scale your company to increase your valuation by talking to some of these brokers.
Like everything in the startup world, its about relationships. So, meeting a broker before you need one will make them call you with lucrative options when you are not looking, which puts you in the best position to negotiate and get the best offer when you are ready.
Monday, April 17, 2006
Corporate entreprenuership vs starting your company
It seems a coincidence that I've been faced with this topic multiple times in the past week.
I am part of a Boston University Entreprenuership Management Committee. Here I heard some discussion about including separate corporate entreprenuership panels additional to entreprenuership for company founders.
I always think of myself an entreprenuer, and a big company person, worked for 10 yrs in large companies, then been a startup CEO for 5 yrs.
Y'day I had a discussion with my co-founder of my last startup who currently works in a large corporation that startup life was not different from a large company if you are truly entrerprenuerial.
So, here's my comparion of the two - life as a startup founder vs corporate life as a successful corporate entreprenuer.
1. Its a myth that you don't work for a boss in a startup. In fact you have several bosses. Your investors, your board, the customers you court for acceptance of something new, your employees. Everyone has different interests and you have to constantly keep them sold on your common vision. Its the same as working for a boss in a company and managing expectations of several internal groups to achieve results.
2. Its another myth that you do only fun work you want in a startup. If you are a founder you do more crap work when you get started (before funding). Then, whatever you think of fun - product development, marketing, sales, customer interaction ..., you have to do lot more different work. I'd compare my corporate meetings (thrust upon us) with VC meetings (several rounds) and cannot tell you which was worst.
3. Now coming to the fun part, hiring people, and building your team, one at a time is beautiful and the same in both cases. It may appear that you have lots of perks to offer a corporate employee to lure them in or your stock options may seem lucrative in a flourishing startup. But, the reality is that the real job is understanding the motivation of the employee and selling them on your vision to build and deliver something beautiful and its the same.
4. I hear of several entreprenuers who get started with a startup saying that you can get things done in a startup. Its true that starting afresh as a company has its advantage of size. But, in my experience, when you get past the initial product development and go-to-market launch, working with real customers is the same. It involves lot of meetings, understanding human nature, test of real understanding of the market and how quickly you can adapt to make that one customer happy. I have seen entire large organizations bend over and change rules to meet customer needs in large companies on the last day before closing a quarter to meet the sales numbers. Startups do this for the initial customers with glee.
5. People are very optimistic in a well growing startup, that energy is amazing. I've strived to get it in organizations I've built in large compaies, but it takes special managers to achieve it.
6. In both cases, you are part of a large ecosystem. I worked in large companies interacting with several organizations doing what I call "corporate evangelism" as I introduced web solutions as the web evolved. I did not realize its a developed competency as I worked with different groups across the company, understanding their vested interests in the my proposals and learning to appreciate input from people smarter than me.
When I started my own startup, I suddenly realized that I was part of a different ecosystem, but it operated in a similar way. There are VCs who operate in trusted groups, analysts who influence the positioning of your product in the marketplace, customers again influenced by other similar customes and media, media which has key players, large companies who could be your partner or investor , all inflencing the survival and success of your company. Again you are an evangelist of your vision and you need to know whose inputs are smart input.
7. Thanks for my Coola co-founder for this insight. In a successful corporate role as in a startup, when you are responsible for creating something new and executing on it, its the same cycle - you work very very hard, on lot of things in parallel, always trying to find whats your strategy and who is your real customer, what partnership is going to turn into your winning partnership, all along working on several projects, more than the one fun job you want to always do.
I appreciate comments if you see similaries or differences. Pl don't post comments to sell irrelevant stuff, thats a waste of everyones time and I'd be sure to block it soon :-))
I am part of a Boston University Entreprenuership Management Committee. Here I heard some discussion about including separate corporate entreprenuership panels additional to entreprenuership for company founders.
I always think of myself an entreprenuer, and a big company person, worked for 10 yrs in large companies, then been a startup CEO for 5 yrs.
Y'day I had a discussion with my co-founder of my last startup who currently works in a large corporation that startup life was not different from a large company if you are truly entrerprenuerial.
So, here's my comparion of the two - life as a startup founder vs corporate life as a successful corporate entreprenuer.
1. Its a myth that you don't work for a boss in a startup. In fact you have several bosses. Your investors, your board, the customers you court for acceptance of something new, your employees. Everyone has different interests and you have to constantly keep them sold on your common vision. Its the same as working for a boss in a company and managing expectations of several internal groups to achieve results.
2. Its another myth that you do only fun work you want in a startup. If you are a founder you do more crap work when you get started (before funding). Then, whatever you think of fun - product development, marketing, sales, customer interaction ..., you have to do lot more different work. I'd compare my corporate meetings (thrust upon us) with VC meetings (several rounds) and cannot tell you which was worst.
3. Now coming to the fun part, hiring people, and building your team, one at a time is beautiful and the same in both cases. It may appear that you have lots of perks to offer a corporate employee to lure them in or your stock options may seem lucrative in a flourishing startup. But, the reality is that the real job is understanding the motivation of the employee and selling them on your vision to build and deliver something beautiful and its the same.
4. I hear of several entreprenuers who get started with a startup saying that you can get things done in a startup. Its true that starting afresh as a company has its advantage of size. But, in my experience, when you get past the initial product development and go-to-market launch, working with real customers is the same. It involves lot of meetings, understanding human nature, test of real understanding of the market and how quickly you can adapt to make that one customer happy. I have seen entire large organizations bend over and change rules to meet customer needs in large companies on the last day before closing a quarter to meet the sales numbers. Startups do this for the initial customers with glee.
5. People are very optimistic in a well growing startup, that energy is amazing. I've strived to get it in organizations I've built in large compaies, but it takes special managers to achieve it.
6. In both cases, you are part of a large ecosystem. I worked in large companies interacting with several organizations doing what I call "corporate evangelism" as I introduced web solutions as the web evolved. I did not realize its a developed competency as I worked with different groups across the company, understanding their vested interests in the my proposals and learning to appreciate input from people smarter than me.
When I started my own startup, I suddenly realized that I was part of a different ecosystem, but it operated in a similar way. There are VCs who operate in trusted groups, analysts who influence the positioning of your product in the marketplace, customers again influenced by other similar customes and media, media which has key players, large companies who could be your partner or investor , all inflencing the survival and success of your company. Again you are an evangelist of your vision and you need to know whose inputs are smart input.
7. Thanks for my Coola co-founder for this insight. In a successful corporate role as in a startup, when you are responsible for creating something new and executing on it, its the same cycle - you work very very hard, on lot of things in parallel, always trying to find whats your strategy and who is your real customer, what partnership is going to turn into your winning partnership, all along working on several projects, more than the one fun job you want to always do.
I appreciate comments if you see similaries or differences. Pl don't post comments to sell irrelevant stuff, thats a waste of everyones time and I'd be sure to block it soon :-))
Good Time to Start a Company
I came across this blog posting, which is sound advice for an entreprenuer who is fretting about the timing to start a company - Anytime is the Right Time to Start a Company - Blue Flavor
Every entreprenuer starting up has heard these set of reasons atleast once in life.
My only piece of advice would you to start a company when you are ready, but market validate your idea because some ideas may be too radical for the market to catchup soon, some may be ahead of their times. Market validating will help set your own expectation about your companies pace of growth.
Every entreprenuer starting up has heard these set of reasons atleast once in life.
My only piece of advice would you to start a company when you are ready, but market validate your idea because some ideas may be too radical for the market to catchup soon, some may be ahead of their times. Market validating will help set your own expectation about your companies pace of growth.
Friday, March 24, 2006
Let the customer lead
I am very proud of the fact that we had Palm users who helped us understand market needs.
Thinking back, its hard to say what we built in the company culture that fostered this relationship with our users.
When I used to read my B-school material "let the customer lead" used to sound good, but I could not wrap my arms around it. It seemed idealistic that a company can know who the real customer who was paying for the product and establish communictaion with them to let them tell us what they want us to improve or offer next and just listen.
With Coola, we started out as a dot com business, free download for Palm users, and free for smaller web sites to put Coolets (the Coola buttons) that a user can click to get that information into her Palm Apps later. Thinking back the real promise was in the product. Users loved it. We got 50 sites to put coolets in 3 months and went to larger web sites to signup as paid customers.
We were lucky that our user base was a vocal crowd that told us what they liked and did not like.
I think, inside the company, the product managers and engineers alike, loved to hear the feedback. So they responded and listened and adapted.
The more our users had ownership in what we built the more they supported us and helped promote us and our brand and the rest of product extensions were built in Internet time.
I owe it to users like this, for when we had to change direction from the web to focus on Enteprise customers and launched our Servers as "Coola Interchange", the users stuck with us.
They wrote our stories, our dreams and who in product marketing would not love for their customer to write the product spec sheets for them!
Thinking back, its hard to say what we built in the company culture that fostered this relationship with our users.
When I used to read my B-school material "let the customer lead" used to sound good, but I could not wrap my arms around it. It seemed idealistic that a company can know who the real customer who was paying for the product and establish communictaion with them to let them tell us what they want us to improve or offer next and just listen.
With Coola, we started out as a dot com business, free download for Palm users, and free for smaller web sites to put Coolets (the Coola buttons) that a user can click to get that information into her Palm Apps later. Thinking back the real promise was in the product. Users loved it. We got 50 sites to put coolets in 3 months and went to larger web sites to signup as paid customers.
We were lucky that our user base was a vocal crowd that told us what they liked and did not like.
I think, inside the company, the product managers and engineers alike, loved to hear the feedback. So they responded and listened and adapted.
The more our users had ownership in what we built the more they supported us and helped promote us and our brand and the rest of product extensions were built in Internet time.
I owe it to users like this, for when we had to change direction from the web to focus on Enteprise customers and launched our Servers as "Coola Interchange", the users stuck with us.
They wrote our stories, our dreams and who in product marketing would not love for their customer to write the product spec sheets for them!
Monday, February 13, 2006
Where to start market validation -leave some futuristics ideas for the future
Every Technology Enterprenuer goes this question sooner or later. We come with a grand idea, assuming we are making life easy for some constituency. When you start thinking about who could be your potential paying customer, the fun begins.
Pure consumer play sites are returning nowadays. I am glad the phase when enterprenuers were force-fitting a consumer idea to a corporate market for funding pitches are over :-))
Well, with Coola since the idea was about making information mobile between a web server/site to a Palm device it was very horizontal. I have written about my experience market validating with real customers to understand certain markets for certain type of datatypes.
I remember the days before that! We painted blue-sky scenarios of all possible market segments.
One interesting experience comes to mind. We thought! Hey, we could get coupons from web sites and allow users to take them in a palm instead of carrying coupons on paper and allow them to be scanned at the stores. That too, grocery stores seemed a natural as stop-and-shop etc were marketing for their cards to understand our purchase behaviour to give us appropriate coupons.
We actually downloaded a bar-code of a coupon on the palm using our software as a prototype and took it to the grocery store. Amist funny stares we got the lady at checkout to point the bar code reader at our palm screen (yeah really) and it read and gave us the discount.
Our dream was that one day we'll be able to collect bar codes from the stores and can send it to some web service to do comparison shopping for consumers, or track inventory or order parts for an enteprise. This was in end 1999, and even today this is open territory, waiting for an innovative company to execute, maybe it will take birth as local search.
Again, in the early stages, a company needs to focus, take one tiny step at a time and market validate what is the best place to start execution.
My subsequent attempts next week, to find coupon sites to partner with us or find favorable response from stores was not positive. All this was before our funding rounds. Our learning was that we needed an early adopter segment who would love technology innovations and grocery companies were not exactly in that category so we dropped it.
Pure consumer play sites are returning nowadays. I am glad the phase when enterprenuers were force-fitting a consumer idea to a corporate market for funding pitches are over :-))
Well, with Coola since the idea was about making information mobile between a web server/site to a Palm device it was very horizontal. I have written about my experience market validating with real customers to understand certain markets for certain type of datatypes.
I remember the days before that! We painted blue-sky scenarios of all possible market segments.
One interesting experience comes to mind. We thought! Hey, we could get coupons from web sites and allow users to take them in a palm instead of carrying coupons on paper and allow them to be scanned at the stores. That too, grocery stores seemed a natural as stop-and-shop etc were marketing for their cards to understand our purchase behaviour to give us appropriate coupons.
We actually downloaded a bar-code of a coupon on the palm using our software as a prototype and took it to the grocery store. Amist funny stares we got the lady at checkout to point the bar code reader at our palm screen (yeah really) and it read and gave us the discount.
Our dream was that one day we'll be able to collect bar codes from the stores and can send it to some web service to do comparison shopping for consumers, or track inventory or order parts for an enteprise. This was in end 1999, and even today this is open territory, waiting for an innovative company to execute, maybe it will take birth as local search.
Again, in the early stages, a company needs to focus, take one tiny step at a time and market validate what is the best place to start execution.
My subsequent attempts next week, to find coupon sites to partner with us or find favorable response from stores was not positive. All this was before our funding rounds. Our learning was that we needed an early adopter segment who would love technology innovations and grocery companies were not exactly in that category so we dropped it.
Saturday, January 28, 2006
Launching a startup - market validating with early customers
Its surprising for me to hear from new enterprenuers repeating the same cycle of I have great technology, built a prototype, just need money to launch the startup.
What is lauching a company? Most think its about opening a web site with some product and content. Those who have marketing background in their team, go to the extent of planning marketing plans and come up with how much more money can help them market better.
These days, with the new Web 2.0 frenzy, there is the added rationale that building a cool technology is enough for some deep-pocket player to buy the company soon.
What are we missing here?
Isn't building a company really about making money for the investors, which includes the founding team. Isn't it about making money by solving a customer problem?
When I started out with Coola, I spent sometime visiting who I thought were my potential customers and market validated the idea. I had started out with a simple idea to make information mobile by clicking on a button on a web site and syncing that information to different applications on the palm.
In my earlier corporate life, we spent a lot of money on traditional market research to understand what our customers wanted. I am a believer of emprical data. But with my startup, I wanted to do talk to real customers and short-list potential market segments first.
I spoke to the GM of Comdex, the large conference company. He loved the idea of using Coola to offer conference schedules to people's Palm saving lot of hassles and money during each conference updating people about changing schedules. His support served as an amunition to plan an event Coolet (the Coola button on sites) to sync into Calendars. Then I went to TVguide, Tvgrid (local competition to tvgrid, owned by student.com) . Slowly this forced us to build a working prototype and start planning a core team and early designs. It also gave an idea about the amount of money required in the first round of funding.
I met switchboard.com to see how Coola can help with taking their yellow pages address mobile into the Palm address book. Very early on we ran into issues of whether Coola should be branded or a non-branded player paid by Switchboard. Its fun each day, it makes us think each day on issues which we cannot decide just by our heart. We decided not to accept the Switchboard deal as we decided we could grow better with a branded play.
Later on we could build a branded Coola button with the support of Palm user groups and early sites which adopted our buttons such that when we went to Boston.com (part of NY times) branding was not part of our discussions. Of course, we had matured in our thinking and offered them a co-branded offer hosted by Coola.
When Switchboard did not work for us, we went to their competition Infospace.com, which was much larger than them. They accepted a branded Coola button but offered a complex deal which involved sharing some equity with them for sharing the space in their web property.
We also met with Intuit who was in the process of aquisition of a small company called onebase which made it easier to create web based databases dynamically, which later became their product quickbase. There we found an interesting offer to use Coola technology for Intuits applications starting with onebase to sync databases from the web to Palm database applications.
All these were just as I offically starting the funding rounds. I had made contact with some investors to get early feedback on my idea. I was amazed at couple responses from the VCs.
a) Infospace was a wall street darling with Navin Jain heralded as someone who made money out of everyone. This was before they moved to wireless and Navin Jain left. So, I heard from VCs saying they would invest if I close the infospace deal. Infospace deal was not giving us money and committing us to pay them. I didn't see any strategic advantage as they were not willing to offer this exclusive to us, saying they would put anyone's buttons on the site if and when we got competition. This means that we spend our initial energy on an infospace launch with no money, pay infospace and help jumpstart any competition when they come with a button next to Coola button. It seems crazy, we didn't do that deal.
It was hard to believe that we could get a large VC backing with infospace deal, but when things turned south 2 years later, we were thankful we did not have the infospace deal holding us hostage to pay equity.
b) Intuit's deal was a good one. They wanted to invest in us to help jumpstart our product development where they will get to use Coola software for their own application and we will go to all markets except theirs. This was a good deal. Only caveat was that we believed in the huge promise of Coola as an horizontal platform and this intial development would limit our design and initial energies. The market supported our hope for 3 years so it may not have been a bad decision. We got a great Intuit support on our board and did not pursue to close this offer.
I wonder, if we could have survived if we had taken the Intuit deal afterall.
I have advisors who believe that corporate money is good if there is a real strategic fit. They can help build confidence in VCs and also serve as a potential exit it things work well for the corporate investor but not in our other option. Again there were VCs who wanted to come in if Intuit would invest.
We did not take the infospace not Intuit deal but were over subscribed for $2million with great VCs who became our friend, guide and partners in a journey that lasted the next 3 years building a great company.
Every day presents decision points, each decision takes us to different directions, so we'll never know, but we have to explore options, open as many doors, make open decisions and keep moving.
What is lauching a company? Most think its about opening a web site with some product and content. Those who have marketing background in their team, go to the extent of planning marketing plans and come up with how much more money can help them market better.
These days, with the new Web 2.0 frenzy, there is the added rationale that building a cool technology is enough for some deep-pocket player to buy the company soon.
What are we missing here?
Isn't building a company really about making money for the investors, which includes the founding team. Isn't it about making money by solving a customer problem?
When I started out with Coola, I spent sometime visiting who I thought were my potential customers and market validated the idea. I had started out with a simple idea to make information mobile by clicking on a button on a web site and syncing that information to different applications on the palm.
In my earlier corporate life, we spent a lot of money on traditional market research to understand what our customers wanted. I am a believer of emprical data. But with my startup, I wanted to do talk to real customers and short-list potential market segments first.
I spoke to the GM of Comdex, the large conference company. He loved the idea of using Coola to offer conference schedules to people's Palm saving lot of hassles and money during each conference updating people about changing schedules. His support served as an amunition to plan an event Coolet (the Coola button on sites) to sync into Calendars. Then I went to TVguide, Tvgrid (local competition to tvgrid, owned by student.com) . Slowly this forced us to build a working prototype and start planning a core team and early designs. It also gave an idea about the amount of money required in the first round of funding.
I met switchboard.com to see how Coola can help with taking their yellow pages address mobile into the Palm address book. Very early on we ran into issues of whether Coola should be branded or a non-branded player paid by Switchboard. Its fun each day, it makes us think each day on issues which we cannot decide just by our heart. We decided not to accept the Switchboard deal as we decided we could grow better with a branded play.
Later on we could build a branded Coola button with the support of Palm user groups and early sites which adopted our buttons such that when we went to Boston.com (part of NY times) branding was not part of our discussions. Of course, we had matured in our thinking and offered them a co-branded offer hosted by Coola.
When Switchboard did not work for us, we went to their competition Infospace.com, which was much larger than them. They accepted a branded Coola button but offered a complex deal which involved sharing some equity with them for sharing the space in their web property.
We also met with Intuit who was in the process of aquisition of a small company called onebase which made it easier to create web based databases dynamically, which later became their product quickbase. There we found an interesting offer to use Coola technology for Intuits applications starting with onebase to sync databases from the web to Palm database applications.
All these were just as I offically starting the funding rounds. I had made contact with some investors to get early feedback on my idea. I was amazed at couple responses from the VCs.
a) Infospace was a wall street darling with Navin Jain heralded as someone who made money out of everyone. This was before they moved to wireless and Navin Jain left. So, I heard from VCs saying they would invest if I close the infospace deal. Infospace deal was not giving us money and committing us to pay them. I didn't see any strategic advantage as they were not willing to offer this exclusive to us, saying they would put anyone's buttons on the site if and when we got competition. This means that we spend our initial energy on an infospace launch with no money, pay infospace and help jumpstart any competition when they come with a button next to Coola button. It seems crazy, we didn't do that deal.
It was hard to believe that we could get a large VC backing with infospace deal, but when things turned south 2 years later, we were thankful we did not have the infospace deal holding us hostage to pay equity.
b) Intuit's deal was a good one. They wanted to invest in us to help jumpstart our product development where they will get to use Coola software for their own application and we will go to all markets except theirs. This was a good deal. Only caveat was that we believed in the huge promise of Coola as an horizontal platform and this intial development would limit our design and initial energies. The market supported our hope for 3 years so it may not have been a bad decision. We got a great Intuit support on our board and did not pursue to close this offer.
I wonder, if we could have survived if we had taken the Intuit deal afterall.
I have advisors who believe that corporate money is good if there is a real strategic fit. They can help build confidence in VCs and also serve as a potential exit it things work well for the corporate investor but not in our other option. Again there were VCs who wanted to come in if Intuit would invest.
We did not take the infospace not Intuit deal but were over subscribed for $2million with great VCs who became our friend, guide and partners in a journey that lasted the next 3 years building a great company.
Every day presents decision points, each decision takes us to different directions, so we'll never know, but we have to explore options, open as many doors, make open decisions and keep moving.
Thursday, January 12, 2006
An Enterprenuer's Day in Early Stages of a Startup
I am focusing here, on the uncertainity of a typical day at the very early stages of a startup. Some of my posts here are also influenced by the enterprenuers I come across in the startups I am involved as an advisor.
We all know tactical ways to get our job done, whatever our job functions, pick what applies to you as you read this:
- Engg and Product Development - Designing the scope, specs,development cycle, assigning and measuring the right resources for the job, getting the development environment setup ..
- Marketing -Developing a marketing plan, understanding the key customer, what problem we solve, coming with brands and brand extensions, making product marketing material - sites, collatrals,planning a marketing a launch, decisions on the products mix, PR, ads,market research, working with agencies,hiring the key resources, metrics of progress, communication to different constituencies ...
-Sales and Support - Developing a Sales plan, understanding who the real customer is, why they buy, building out the sales forces, managing sales people, tracking A, B and C level of prospects and making projections for each quarter, contracts, negotitions, networking events ...
-Business Operations - Finance, Accounting, Making plans, hiring right people, tracking the right metrics, keeping books clean, tracking real costs and revenues, ...
For a startup theres the added function of Venture Financial Cycles, and the Communication aspect of interacting with investors and market influencers. I'll write about that seperately.
Given all this, a typical day should be straight forward.Yes? Not really.
Thats the fun of a startup or an enterprenurial company environment. I have experiened that in Coola, my startup and also every time I started out building a new Internet product organization in different large companies I worked.
The exciting and challenging part of a typical day is where to start, what to do.
Its more glaring in a startup or enterprenurial environment as we avoid redundant or unproductive tasks and seek out activities that lead to our goals be it raising money, launching product, or scaling team or expanding customer base or staring at all of them at once.
My advisor Piyush Patel, who was then CEO of Cabletron, told me once piece of advice. It worked well for me as I am a planning person.
He said, make a plan with some timelines right from the start, even before you raise money, or actually build the company. I followed that in Coola and do till today.
The plan can be high-level but with real dates. Making the plan will help us think through how to get there. The dates wil help us feel good about what progress we have made. I have looked back at some crazy ambitious plans of early Coola days and laughed at them at my own naivete. But the important thing its that helped as steps of a ladder to help us take the next step.
I am a big believer of networking, again with integrity, respecting the other person's boundaries. So, I have had days when I started my Coola plan before funding saying "Find who can help in understanding funding", "Learn to do ...". I adpated it as time went on to say "Build a prototype", "Get a joining promise from core team" etc as I started my investor rounds.
The point I want to make is about how unstructured our days can be. It can give us lot of room for creativity, or let us go through a day scrambling for a success point to feel good about. Realistically, I've had most days start with the challenge and end up with one small success giving hope for the next day.
In my case with Coola, we moved from a Web Service company to a Software company targeting different set of customers. So this uncertainity was not only in early days, it stayed with me and helped us identify our Enterprise product "mobile EAI Server" and the first of paying customers. So I see this as a typical day of an enterprenuer with different set of options to choose from as the startup grows through stages of getting funded, launching product, scaling management team, expanding to next level etc.
We all know tactical ways to get our job done, whatever our job functions, pick what applies to you as you read this:
- Engg and Product Development - Designing the scope, specs,development cycle, assigning and measuring the right resources for the job, getting the development environment setup ..
- Marketing -Developing a marketing plan, understanding the key customer, what problem we solve, coming with brands and brand extensions, making product marketing material - sites, collatrals,planning a marketing a launch, decisions on the products mix, PR, ads,market research, working with agencies,hiring the key resources, metrics of progress, communication to different constituencies ...
-Sales and Support - Developing a Sales plan, understanding who the real customer is, why they buy, building out the sales forces, managing sales people, tracking A, B and C level of prospects and making projections for each quarter, contracts, negotitions, networking events ...
-Business Operations - Finance, Accounting, Making plans, hiring right people, tracking the right metrics, keeping books clean, tracking real costs and revenues, ...
For a startup theres the added function of Venture Financial Cycles, and the Communication aspect of interacting with investors and market influencers. I'll write about that seperately.
Given all this, a typical day should be straight forward.Yes? Not really.
Thats the fun of a startup or an enterprenurial company environment. I have experiened that in Coola, my startup and also every time I started out building a new Internet product organization in different large companies I worked.
The exciting and challenging part of a typical day is where to start, what to do.
Its more glaring in a startup or enterprenurial environment as we avoid redundant or unproductive tasks and seek out activities that lead to our goals be it raising money, launching product, or scaling team or expanding customer base or staring at all of them at once.
My advisor Piyush Patel, who was then CEO of Cabletron, told me once piece of advice. It worked well for me as I am a planning person.
He said, make a plan with some timelines right from the start, even before you raise money, or actually build the company. I followed that in Coola and do till today.
The plan can be high-level but with real dates. Making the plan will help us think through how to get there. The dates wil help us feel good about what progress we have made. I have looked back at some crazy ambitious plans of early Coola days and laughed at them at my own naivete. But the important thing its that helped as steps of a ladder to help us take the next step.
I am a big believer of networking, again with integrity, respecting the other person's boundaries. So, I have had days when I started my Coola plan before funding saying "Find who can help in understanding funding", "Learn to do ...". I adpated it as time went on to say "Build a prototype", "Get a joining promise from core team" etc as I started my investor rounds.
The point I want to make is about how unstructured our days can be. It can give us lot of room for creativity, or let us go through a day scrambling for a success point to feel good about. Realistically, I've had most days start with the challenge and end up with one small success giving hope for the next day.
In my case with Coola, we moved from a Web Service company to a Software company targeting different set of customers. So this uncertainity was not only in early days, it stayed with me and helped us identify our Enterprise product "mobile EAI Server" and the first of paying customers. So I see this as a typical day of an enterprenuer with different set of options to choose from as the startup grows through stages of getting funded, launching product, scaling management team, expanding to next level etc.
Thursday, December 15, 2005
Execution is Everything
Execution is everything seems like a cliche I heard from many VC many times during the funding rounds. I learnt what it meant as soon as I got the Series A money.
Earlier in my 15 years of corporate life, we had management offsites to brainstorm strategy. Strategy was cool and execution seemed tactical. I didn't understand then as I loved the operational side of getting results.
Once you have a startup, execution means getting the job done. Delivering on what you promise your investors, employees, partners, the promise of what your vision is all about. Vision sounds again beautiful when you paint a dream. Execution seems like hard word.
I went to the bank to open a bank account with checks for $1million. Then I had the urgency to find office space and get our team into productive mode. We already had a core team in place, we used to meet at Tufts university in the cafeteria and designed the basic Coola system. Thanks for ASP servers, we even had basic tech infrastructure in place to start work.
I found that those people who rolled up their sleeves and were ready to do all the dirty work were the real startup people. They were the ones who learnt and grew. They were ready to adapt to change, but were execution people.
As founder/CEO (I use this term interchangablly as it all means the main work horse in the early days), I found I had to do more dirty work that I could not find the people to do or wasn't able to delegate.
So, thats what the VCs meant by execution is everything. They were using years of experience to spot the team capable of surviving the startup ephuohoria to hire, build a good team who could break the job to what needs to be done and do it happily because they really believed in the vision they were pitching.
I digress for a minute as I have to share with you my set of jokers who showed up to help with all sorts of consulting jobs that seems trivial, boring or just not-fun to do.
One was offering to get the office space and all logistics and get up up and running.
We all have moved in America. We know its not fun to call the phone company, electric company, Internet Access provider (even if its one the same companies), research options and get the best one and not to mention the office furniture, computers etc. He wanted a chunk of the company. No joke!
This was 1999 end, with all office space taken. Internet access took 3 months to get. I have intervied people for jobs with looming deadlines at work, but not for one like this. Well, I found he was not making any promise of delivery on time.
I got a sub-leased space from a company who had sold to a mid-west company and got the lease transferred to us and made that company leave behind the deposit to pickup later after we moved out so all was well within days.
I think if you plan ahead its good thing, but planning for hiring your team and technology and your first customer will be more important before you raise money.
So, if you work on this logistics remembering its your first exercise in managing your cash flow and remember how hard you worked to raise the money, it will get you into proper execution mode. And remember execution is everything.
Earlier in my 15 years of corporate life, we had management offsites to brainstorm strategy. Strategy was cool and execution seemed tactical. I didn't understand then as I loved the operational side of getting results.
Once you have a startup, execution means getting the job done. Delivering on what you promise your investors, employees, partners, the promise of what your vision is all about. Vision sounds again beautiful when you paint a dream. Execution seems like hard word.
I went to the bank to open a bank account with checks for $1million. Then I had the urgency to find office space and get our team into productive mode. We already had a core team in place, we used to meet at Tufts university in the cafeteria and designed the basic Coola system. Thanks for ASP servers, we even had basic tech infrastructure in place to start work.
I found that those people who rolled up their sleeves and were ready to do all the dirty work were the real startup people. They were the ones who learnt and grew. They were ready to adapt to change, but were execution people.
As founder/CEO (I use this term interchangablly as it all means the main work horse in the early days), I found I had to do more dirty work that I could not find the people to do or wasn't able to delegate.
So, thats what the VCs meant by execution is everything. They were using years of experience to spot the team capable of surviving the startup ephuohoria to hire, build a good team who could break the job to what needs to be done and do it happily because they really believed in the vision they were pitching.
I digress for a minute as I have to share with you my set of jokers who showed up to help with all sorts of consulting jobs that seems trivial, boring or just not-fun to do.
One was offering to get the office space and all logistics and get up up and running.
We all have moved in America. We know its not fun to call the phone company, electric company, Internet Access provider (even if its one the same companies), research options and get the best one and not to mention the office furniture, computers etc. He wanted a chunk of the company. No joke!
This was 1999 end, with all office space taken. Internet access took 3 months to get. I have intervied people for jobs with looming deadlines at work, but not for one like this. Well, I found he was not making any promise of delivery on time.
I got a sub-leased space from a company who had sold to a mid-west company and got the lease transferred to us and made that company leave behind the deposit to pickup later after we moved out so all was well within days.
I think if you plan ahead its good thing, but planning for hiring your team and technology and your first customer will be more important before you raise money.
So, if you work on this logistics remembering its your first exercise in managing your cash flow and remember how hard you worked to raise the money, it will get you into proper execution mode. And remember execution is everything.
Wednesday, November 09, 2005
I love Product Development Startup Style
My career has been shaped by my at-sight love of the Web and its potential. I have introduced the first Web applications at several firms I worked at. Each time it has been a new product development effort along with an evangelist role getting buy-in from several constituencies.
At Harcourt, I built out the product catalog integrating 27 divisional products of a $2billion company into harcourt.com, with a great team of people.
So, I came into my own startup thinking I know the tactical steps to make it all happen!
At Coola, we started with building a server software (ASP hosted server) and a client piece sitting on a Palm pilot. We launched this with a Press release saying "World's fastest way to Palm enable your web-site" and signed up 500 sites to put a button, which we called "Coolets" which encoded the information that the site owner wanted their users to take mobile, like an address, event, recepies, maps, documents etc. A user could click on any coolet from a site and the information will wait for them on Coola's site. Then when the user synched their Palm from anywhere (home or work or wirelessly), Coola would put the information onto the Palm into the right application for the type of information. For example, a Comdex Coolet will goto a calendar entry, while a map will go into an image reader on the palm and a document would go into one of 21 Doc readers on the Palm.
It was a chicken and Egg game to get people to put Coolets on their sites and users to download Coola clients to their Palms.
The fun and unexpected part of this ride for me was that the Product Development cycle was full of options to innovate. We signed Palm User Groups all around the country. Then we formed a product advisory of key Palm user group leaders to beta test each release of Coola, and give us feedback and new product requirements and iteratively built Coola and released each feature with a positive review from the Palm User Groups. They helped communicate product features and were a market extension of Coola team. I had a stellar team at Coola who worked with so much energy and synced with the market feedback.
I am so thankful to the Palm User Groups for Competitive analysis and helping us communicate our positioning to the world.
We started with a core server and client and added so many new products like "Send to a Friend" where one could click on a Coolet on a site and sent the information to the Palm of a trusted list of friends.
We added "1-Click"to add an entire site content to a Palm document reader.
We added "Coola's right-click" to scrape pieces of content from a site when a coolet was no present. We added "Doc Coolets" to sync Web content into 7 Document Reader softwares on the Palm and signed partnerships with all the Doc reader companies.
With each review and fan page giving direct market feedback, it was so easy for Engineering to work in the Product Developmentt Cycle with Extreme Programming, which usually takes tact on the part of Product Managers.
Of course, we kept our goals on getting market support to sign paying customers in Publishing sites like Boston.com (or New York Times), CIO.com, Coldwell Bankers etc.
The market feedback and support of earlier partnerships with Palm Software players helped us as we moved out to Enterprise market packaging Coola Server as a Mobile EAI Server for companies to integrate their corporate databases to sync into their own Applications into the Palm for clients including NIH, GE Medical, Wharton and Albany Medical. This was a new product, but a brand extension of Coola with a published APIs on both the server (J2EE) and client(on Palm OS. The Palm software players integrated Coola's Palm APIs into their Apps making it easy to establish credibility into the new Enterprise market.
Now, I cannot go back to old style Product development. I have such a hunger for listening to the market and executing in an interative style, which I believe suits any new company well, and oh! its soo much fun!
At Harcourt, I built out the product catalog integrating 27 divisional products of a $2billion company into harcourt.com, with a great team of people.
So, I came into my own startup thinking I know the tactical steps to make it all happen!
At Coola, we started with building a server software (ASP hosted server) and a client piece sitting on a Palm pilot. We launched this with a Press release saying "World's fastest way to Palm enable your web-site" and signed up 500 sites to put a button, which we called "Coolets" which encoded the information that the site owner wanted their users to take mobile, like an address, event, recepies, maps, documents etc. A user could click on any coolet from a site and the information will wait for them on Coola's site. Then when the user synched their Palm from anywhere (home or work or wirelessly), Coola would put the information onto the Palm into the right application for the type of information. For example, a Comdex Coolet will goto a calendar entry, while a map will go into an image reader on the palm and a document would go into one of 21 Doc readers on the Palm.
It was a chicken and Egg game to get people to put Coolets on their sites and users to download Coola clients to their Palms.
The fun and unexpected part of this ride for me was that the Product Development cycle was full of options to innovate. We signed Palm User Groups all around the country. Then we formed a product advisory of key Palm user group leaders to beta test each release of Coola, and give us feedback and new product requirements and iteratively built Coola and released each feature with a positive review from the Palm User Groups. They helped communicate product features and were a market extension of Coola team. I had a stellar team at Coola who worked with so much energy and synced with the market feedback.
I am so thankful to the Palm User Groups for Competitive analysis and helping us communicate our positioning to the world.
We started with a core server and client and added so many new products like "Send to a Friend" where one could click on a Coolet on a site and sent the information to the Palm of a trusted list of friends.
We added "1-Click"to add an entire site content to a Palm document reader.
We added "Coola's right-click" to scrape pieces of content from a site when a coolet was no present. We added "Doc Coolets" to sync Web content into 7 Document Reader softwares on the Palm and signed partnerships with all the Doc reader companies.
With each review and fan page giving direct market feedback, it was so easy for Engineering to work in the Product Developmentt Cycle with Extreme Programming, which usually takes tact on the part of Product Managers.
Of course, we kept our goals on getting market support to sign paying customers in Publishing sites like Boston.com (or New York Times), CIO.com, Coldwell Bankers etc.
The market feedback and support of earlier partnerships with Palm Software players helped us as we moved out to Enterprise market packaging Coola Server as a Mobile EAI Server for companies to integrate their corporate databases to sync into their own Applications into the Palm for clients including NIH, GE Medical, Wharton and Albany Medical. This was a new product, but a brand extension of Coola with a published APIs on both the server (J2EE) and client(on Palm OS. The Palm software players integrated Coola's Palm APIs into their Apps making it easy to establish credibility into the new Enterprise market.
Now, I cannot go back to old style Product development. I have such a hunger for listening to the market and executing in an interative style, which I believe suits any new company well, and oh! its soo much fun!
Saturday, October 15, 2005
Inspiring Leaders and Great Advices
I have written about Advisors and my experience with them and the great people who helped me find the enterprenuer in me.
The more I think about it, I find humble leaders more inspiring. These are amazingly successful people who have achieved amazing feats but are very modest and well grounded.
My advisor Piyush Patel, sold his first startup Yago to Cabletron, became its CEO and scaled it and spun it into 4 public companies. He has taught me many business basics like focusing on your core team, setting goals for yourself and staying focused.
Desh Deshpande, serial enteprenuer, tech visionary and great startup metor is one such person. When I got started with my startup Coola ready to leave 10 years of Corporate management job, he helped me see where I stand in the middle of my career and my startup zeal. The best advice he gave is very useful for all enterprenuers getting started. Set a time limit and jump into raising money knowing you can go back to your job if you do not succeed. That way you are not dragging on in the early stages without getting started, also it will help you get out your best and get started in a timely fashion. I owe it to Desh's advice that I raised my first $1million Venture money on 40 days. As his advice, I set a 3 months limit to raise money and the first VC I contacted said, "you are so naive, even I want to signup today, the paperwork will take 3 months". That made me run like crazy to find a fast paced VC, meet 120 people, build my own draft Series A document and close in 40 days.
Jay Sidhu, currently CEO of Sovereign Bank is another such humble leader I admire. No, he was not my advisor at Coola but is someone I would like to meet.
The more I think about it, I find humble leaders more inspiring. These are amazingly successful people who have achieved amazing feats but are very modest and well grounded.
My advisor Piyush Patel, sold his first startup Yago to Cabletron, became its CEO and scaled it and spun it into 4 public companies. He has taught me many business basics like focusing on your core team, setting goals for yourself and staying focused.
Desh Deshpande, serial enteprenuer, tech visionary and great startup metor is one such person. When I got started with my startup Coola ready to leave 10 years of Corporate management job, he helped me see where I stand in the middle of my career and my startup zeal. The best advice he gave is very useful for all enterprenuers getting started. Set a time limit and jump into raising money knowing you can go back to your job if you do not succeed. That way you are not dragging on in the early stages without getting started, also it will help you get out your best and get started in a timely fashion. I owe it to Desh's advice that I raised my first $1million Venture money on 40 days. As his advice, I set a 3 months limit to raise money and the first VC I contacted said, "you are so naive, even I want to signup today, the paperwork will take 3 months". That made me run like crazy to find a fast paced VC, meet 120 people, build my own draft Series A document and close in 40 days.
Jay Sidhu, currently CEO of Sovereign Bank is another such humble leader I admire. No, he was not my advisor at Coola but is someone I would like to meet.
Friday, October 14, 2005
Funding - Terminologies
A friend of mine was building a cap table for his first startup without knowing the term, so I thought its a good idea to link this glossory of terms from VC experts.
Friday, September 23, 2005
Company Valuations
There are some standard valuation method like discounted cash flow valuation, projected future valuation, or relative valuation against a company's history or against its competitors.
Please refer to Sterns University Prof. Damadaran's site, its an amazing collection of the lessons and spreadsheets to try it out too. Especially don't miss his Google Valuation spreadsheet.
I love the aritcle by Motley Fool on valuation. Here goes.
Also look at my startup valuation from last week
Please refer to Sterns University Prof. Damadaran's site, its an amazing collection of the lessons and spreadsheets to try it out too. Especially don't miss his Google Valuation spreadsheet.
I love the aritcle by Motley Fool on valuation. Here goes.
Also look at my startup valuation from last week
Saturday, September 17, 2005
Startup Advisor
I serve as an advisor to couple startups and get calls asking about advisors -who should be one, how to compensate them, what to expect of them, how to go about finding an advisor etc etc etc.
My advisors:
First, I had an amazing set of advisors for my first startup Coola, without whom I could not have taken off. They helped me find the enterprenuer in me. I am so thankful for them.
I cannot even list all of them here. Three people who helped me from start to finish were Paul English(then GM of Intuit Boston), Piyush Patel (CEO of Cabletron) and Ashish Gupta(VP of Amazon).
All of them were enterprenuers who built companies and sold to a large company.
All of them were very busy people who cared and found the time for me, who did not intimidate me for my dumb questions and set a high threshold for me to strive for, most important they have set role models for being an enterprenuer and a startup advisor.
Who were not my advisors:
I had my share of people who were patronizing. I met 120 people within 40 days when I raised my first $1MM venture money, when I met all kinds of people. There were people who asked me to pay a chunk of my company to come raise money for me and do all kinds of jobs they thought I could not do.
The key to being a successful enterprenuer is to learn to differentiate good people from not just bad, but mediocre people - for advisors, investors and employees.
Why do you need advisors:
They are like your sounding board, the can guide you, they can give you different point of views. This is needed when you try new things which is always in a startup and you want direction, help, validation. Then you decide and make decisions on the right course and execute on it.
From my experience of advisors, I find you need them for different purposes:
1. Advisors as your mentors
2. Advisors as industry experts
3.Advisors as sounding boards
4.Advisors as future potential team.
This is particularly important if you have a huge potential and want to scale your management team and someone you respect can come as an advisor and can get the confidence and synergy and come on board as your management team or future CEO.
How not to select advisors:
I have made my mistakes too. Here we go!
1. Don't go after someone just because they have a brand name in your industry. You can try someone with a brand name, but the variable should always be trust, respect and compatability.
2.Don't go after someone for his or her network
This always fails. My advisors all had great networks and made great intros, but that was not the reason to ask them to be your adviosr in the first place.
I found someone as my advisor for his association with a potential customer (large one) and wasted a lot of time as the underlying trust and respect was not built and he did not understand my company nor share my passion.
Advisor compensation:
I never paid my advisors. I do feel bad about it. They would not take any percentage of the company, which would have been trivial for them anyways. Writing this blog and helping other enterprenuers is my way of givig back what I got from my advisors.
The industry norm is 1/4 of 1 percent for advisor. Don't start by offering it. See if the relationship works both sides and then make the offer.
I offered all my advisors a choice to invest in my company early on and many took it. This way they get to participate in the upside of your growth when you exit.
Getting started with advisors:
This is the most common dilemma startup founders have. Do I just go ask someone to be my advisor? What would they say?
I would suggest that you make sure you like, trust and respect this person first. Then you can approach them and see if they get excited about you and your company.
Please start with a compensation plan. Advisors who start with asking for one and a startup founder starting offering one are not focusing on the trust in the relationship.
Some people are very structured and may ask the demands on their time and what you expect. Have an open honest discussion and it will help build the relationship or to decide if this person will not workout as your advisor.
Interesting Advisor Attempts of mine that failed to make by Advisory:
In the initial Coola days, since we were building out a horizontal software platform, we had no focus. I thought of it as a standard setting game. So I went to W3C and tried to get an advisor to help me out. Obviously, I found a great person, but there are no synergy in our passion towards mobile technology and Coola and it did not work out. The lesson was to wait before declaring some one as your advisors.
Similarly, I had a VC who was a great advisor. I decided to keep him as a friend and informal advisor than pitch to him for money as our styles were different, but he was a great sceptic and sounding board. I did not get an advisor, but got a friend.
Interesting Advisors and Rare Sources:
One of my investors wanted to get someone on my board when I was not quite ready instead that person became a friend and advisor and eventually invested his money too.
My advisors:
First, I had an amazing set of advisors for my first startup Coola, without whom I could not have taken off. They helped me find the enterprenuer in me. I am so thankful for them.
I cannot even list all of them here. Three people who helped me from start to finish were Paul English(then GM of Intuit Boston), Piyush Patel (CEO of Cabletron) and Ashish Gupta(VP of Amazon).
All of them were enterprenuers who built companies and sold to a large company.
All of them were very busy people who cared and found the time for me, who did not intimidate me for my dumb questions and set a high threshold for me to strive for, most important they have set role models for being an enterprenuer and a startup advisor.
Who were not my advisors:
I had my share of people who were patronizing. I met 120 people within 40 days when I raised my first $1MM venture money, when I met all kinds of people. There were people who asked me to pay a chunk of my company to come raise money for me and do all kinds of jobs they thought I could not do.
The key to being a successful enterprenuer is to learn to differentiate good people from not just bad, but mediocre people - for advisors, investors and employees.
Why do you need advisors:
They are like your sounding board, the can guide you, they can give you different point of views. This is needed when you try new things which is always in a startup and you want direction, help, validation. Then you decide and make decisions on the right course and execute on it.
From my experience of advisors, I find you need them for different purposes:
1. Advisors as your mentors
2. Advisors as industry experts
3.Advisors as sounding boards
4.Advisors as future potential team.
This is particularly important if you have a huge potential and want to scale your management team and someone you respect can come as an advisor and can get the confidence and synergy and come on board as your management team or future CEO.
How not to select advisors:
I have made my mistakes too. Here we go!
1. Don't go after someone just because they have a brand name in your industry. You can try someone with a brand name, but the variable should always be trust, respect and compatability.
2.Don't go after someone for his or her network
This always fails. My advisors all had great networks and made great intros, but that was not the reason to ask them to be your adviosr in the first place.
I found someone as my advisor for his association with a potential customer (large one) and wasted a lot of time as the underlying trust and respect was not built and he did not understand my company nor share my passion.
Advisor compensation:
I never paid my advisors. I do feel bad about it. They would not take any percentage of the company, which would have been trivial for them anyways. Writing this blog and helping other enterprenuers is my way of givig back what I got from my advisors.
The industry norm is 1/4 of 1 percent for advisor. Don't start by offering it. See if the relationship works both sides and then make the offer.
I offered all my advisors a choice to invest in my company early on and many took it. This way they get to participate in the upside of your growth when you exit.
Getting started with advisors:
This is the most common dilemma startup founders have. Do I just go ask someone to be my advisor? What would they say?
I would suggest that you make sure you like, trust and respect this person first. Then you can approach them and see if they get excited about you and your company.
Please start with a compensation plan. Advisors who start with asking for one and a startup founder starting offering one are not focusing on the trust in the relationship.
Some people are very structured and may ask the demands on their time and what you expect. Have an open honest discussion and it will help build the relationship or to decide if this person will not workout as your advisor.
Interesting Advisor Attempts of mine that failed to make by Advisory:
In the initial Coola days, since we were building out a horizontal software platform, we had no focus. I thought of it as a standard setting game. So I went to W3C and tried to get an advisor to help me out. Obviously, I found a great person, but there are no synergy in our passion towards mobile technology and Coola and it did not work out. The lesson was to wait before declaring some one as your advisors.
Similarly, I had a VC who was a great advisor. I decided to keep him as a friend and informal advisor than pitch to him for money as our styles were different, but he was a great sceptic and sounding board. I did not get an advisor, but got a friend.
Interesting Advisors and Rare Sources:
One of my investors wanted to get someone on my board when I was not quite ready instead that person became a friend and advisor and eventually invested his money too.
Friday, September 16, 2005
Startup Valuation - For an Enterprenuer raising venture money
This is a huge topic. My experience comes from couple areas - raising money for Coola and my work from Harcourt evaluating tech companies for aquisition during the dot com boom.
Most important point I learnt about Startup Valuation is that its different based on perception of who you are, what is in it for you and of course changing market around the startup.
We'll revisit this topic again, for now lets focus on the basics.
Here I am going to focus on the Enterprenuer raising money!
Your startup valuation depends on
a) primarily on you and your core team. Its your word about the promise of how you will build what your promise to the projects your list in your bplan. So, if this is your second or third startup, your previous history talks for you. In my personal experience, I think a first time Enterprenuer can display a higher degree of passion and dream higher (in my case it was because of the ignorance of several difficulties of the business world).
b)Your product (or service). VCs may ask to see a prototype and send you to work on technology, which may take time away from company building and raising money. In all fairness it helps them to understand your product better and if you do it right, you can use this to build your core team and scope your product right.
My only advice is not to build a scaled down version of the product without real customer input.
During my early Coola days, I went to several prospective customers to validate the market and their input helped.
So, if yours if a complex tech product that needs money to build you can build a prototype that shows some functionality visually for the investors to see what the customer will potentially see.
c) Customer and Revenues Yeah, right! How do we get them before the product and team for which we need the money in the first place.
Didn't I tell you in the beginning this is a chicken and egg game :-))
You can take your idea (in powerpoint or GUI of product screen as prototype) and show to potential customers and see if you can get some interest.
This can help immensely with scoping the product, especially not going down the road of adding features without considering usability from the customer perspective. More important is that it will help tryout diffferent ideas for your real business model.
If its a software product, what kind of lisencing arrangement may work for your market?
Its easy to start as an ASP instead of a lisenced software for a startup, but enterprise customers won't like it.
Did I tell this is was one of the advices I got in the early Coola days and since Web businesses were booming, I chose the ASP route and went to Web businesses to put Coola Buttons to get their site content to Palm Pilots via Coola. We had 500 sites signup ad go live, including Boston.com, CIO.com, Wharton, even Palm.com, but very few very revenue customers. Then 1 year later we moved to enterprise market with a lisence of Cool Servers, then we got real customers and money!
d) Your market What market are you operating in? There are some valuation range for businesses operating in Financial markets vs Manufacturing market. This can be arrived a logically by looking at your market size, and potential estimates of how big your company can grow.
So, its common for enterprenuers to go about describing their business as "Google of blah blah space". It has an additional advantage. It helps the investor understand your business model and dream of how big you want to be.
Thats the basic list for first round investor perceptions of valuation.
e) Competition This is more applicable for second and further rounds of funding. The valuation of your competition in public markets or in their rounds of funding helps set the range for yours for the same reason of market size. It also serves as a comparable metric for what your company can achieve.
The trick in the early stages is to try and position yourself uniquely so such comparisons are not easy. Of course all Enterpreneurs would swear that their idea is very unqiue and as no competition. I did too :-)) I still do ;-))
f) Geography I don't know how much logical reasoning is behind this one. I heard repeatedly from investors that I would get a higher valuation from West coast than east coast. I had my lead investor from east coast and closed my Series A at $5Million pre money and was happy with it.
ok, See you next time, I'll write about valuation from the corporate buyer perspective then.
Most important point I learnt about Startup Valuation is that its different based on perception of who you are, what is in it for you and of course changing market around the startup.
We'll revisit this topic again, for now lets focus on the basics.
Here I am going to focus on the Enterprenuer raising money!
Your startup valuation depends on
a) primarily on you and your core team. Its your word about the promise of how you will build what your promise to the projects your list in your bplan. So, if this is your second or third startup, your previous history talks for you. In my personal experience, I think a first time Enterprenuer can display a higher degree of passion and dream higher (in my case it was because of the ignorance of several difficulties of the business world).
b)Your product (or service). VCs may ask to see a prototype and send you to work on technology, which may take time away from company building and raising money. In all fairness it helps them to understand your product better and if you do it right, you can use this to build your core team and scope your product right.
My only advice is not to build a scaled down version of the product without real customer input.
During my early Coola days, I went to several prospective customers to validate the market and their input helped.
So, if yours if a complex tech product that needs money to build you can build a prototype that shows some functionality visually for the investors to see what the customer will potentially see.
c) Customer and Revenues Yeah, right! How do we get them before the product and team for which we need the money in the first place.
Didn't I tell you in the beginning this is a chicken and egg game :-))
You can take your idea (in powerpoint or GUI of product screen as prototype) and show to potential customers and see if you can get some interest.
This can help immensely with scoping the product, especially not going down the road of adding features without considering usability from the customer perspective. More important is that it will help tryout diffferent ideas for your real business model.
If its a software product, what kind of lisencing arrangement may work for your market?
Its easy to start as an ASP instead of a lisenced software for a startup, but enterprise customers won't like it.
Did I tell this is was one of the advices I got in the early Coola days and since Web businesses were booming, I chose the ASP route and went to Web businesses to put Coola Buttons to get their site content to Palm Pilots via Coola. We had 500 sites signup ad go live, including Boston.com, CIO.com, Wharton, even Palm.com, but very few very revenue customers. Then 1 year later we moved to enterprise market with a lisence of Cool Servers, then we got real customers and money!
d) Your market What market are you operating in? There are some valuation range for businesses operating in Financial markets vs Manufacturing market. This can be arrived a logically by looking at your market size, and potential estimates of how big your company can grow.
So, its common for enterprenuers to go about describing their business as "Google of blah blah space". It has an additional advantage. It helps the investor understand your business model and dream of how big you want to be.
Thats the basic list for first round investor perceptions of valuation.
e) Competition This is more applicable for second and further rounds of funding. The valuation of your competition in public markets or in their rounds of funding helps set the range for yours for the same reason of market size. It also serves as a comparable metric for what your company can achieve.
The trick in the early stages is to try and position yourself uniquely so such comparisons are not easy. Of course all Enterpreneurs would swear that their idea is very unqiue and as no competition. I did too :-)) I still do ;-))
f) Geography I don't know how much logical reasoning is behind this one. I heard repeatedly from investors that I would get a higher valuation from West coast than east coast. I had my lead investor from east coast and closed my Series A at $5Million pre money and was happy with it.
ok, See you next time, I'll write about valuation from the corporate buyer perspective then.
Thursday, September 15, 2005
Start of a Startup - How to focus and move ahead in the early days
I have a new passion called Moomli (http://www.moomli.com) meaning "My Only One Moment to Liberate India". Its a social enterpreneurship venture to help grassroot charities in India.
Moomli (http://www.moomli.com/) helps Indians abroad send charity greeting cards to their family in India and gives the proceeds to the charities. The cards are all real cards with a real story behind it.
Today I want to share a dilemma every enterpreneur faces everytime with a new startup.
It is "Where to start and what to focus on?".
The beauty of a startup is that you can run very very fast and work beyond your known limits and its so much fun. I have written many times about Team Building . So, assuming you have a great team, there are going to be lots of ideas, real good ones.
So, every startup team faces this sooner or later - what to focus on.
I believe, the same idea given to different teams with the same initial resources can lead to totally different companies because its the team that executes that is going to run faster and set directions based on the team culture.
So, it would be a good idea early on to start a process by which you decide to focus your energies collectively. It could be a discussion forum or friday get togethers whatever works for your team.
During my startup, Coola, thanks to the advice of Piyush Patel, I had a working plan with some target dates even before I raised venture capital. We kept updating this and it gave us a sense of accomlishment as we reached some goals, made us look back laugh at our own naiveté for some others. We updated them as we had major direction changes. I also got a similar plan from my different teams - CTO, Marketing, Sales etc as we grew, and this helped sync up their efforts towards a common goal.
Please note, this does not have to be a beauracratic process, but putting a plan in writing helps.
The problem is in the very early days when team boundaries are not set and everyone is full of ideas. I could't find any other way around this, you the founder have to be the bad cop and hear it out and make decisions so that in the short term you can go after the low hanging fruits and have some synergy towards where the company is headed long term.
Moomli (http://www.moomli.com/) helps Indians abroad send charity greeting cards to their family in India and gives the proceeds to the charities. The cards are all real cards with a real story behind it.
Today I want to share a dilemma every enterpreneur faces everytime with a new startup.
It is "Where to start and what to focus on?".
The beauty of a startup is that you can run very very fast and work beyond your known limits and its so much fun. I have written many times about Team Building . So, assuming you have a great team, there are going to be lots of ideas, real good ones.
So, every startup team faces this sooner or later - what to focus on.
I believe, the same idea given to different teams with the same initial resources can lead to totally different companies because its the team that executes that is going to run faster and set directions based on the team culture.
So, it would be a good idea early on to start a process by which you decide to focus your energies collectively. It could be a discussion forum or friday get togethers whatever works for your team.
During my startup, Coola, thanks to the advice of Piyush Patel, I had a working plan with some target dates even before I raised venture capital. We kept updating this and it gave us a sense of accomlishment as we reached some goals, made us look back laugh at our own naiveté for some others. We updated them as we had major direction changes. I also got a similar plan from my different teams - CTO, Marketing, Sales etc as we grew, and this helped sync up their efforts towards a common goal.
Please note, this does not have to be a beauracratic process, but putting a plan in writing helps.
The problem is in the very early days when team boundaries are not set and everyone is full of ideas. I could't find any other way around this, you the founder have to be the bad cop and hear it out and make decisions so that in the short term you can go after the low hanging fruits and have some synergy towards where the company is headed long term.
Saturday, August 20, 2005
Accounting Software and CPA
Keeping your books clean saves a lot of time during the year end tax period. It is a good habit to keep your books uptodate and check on your cash flows so you can see how you are growing and pla your capital needs.
Yeah, I agree its not the fun part of startup.
It makes sense to invest in an accounting software right away.
Here is a comparison of the different accounting softwares and their costs.
http://www.entrepreneur.com/features/softguide/detail/1,5804,,00.htmlsCat=Accounting/Financial
I do my banking online, so I find it easier to pay all my bills online. That way I can get a report of the months activity. So I prefer my bank to sync into my accounting software. That may not be everyone's needs.
If you have an ecommerce business, it may save costs to find a merchant account who may also serve as your bank for writing checks so you have one less account to manage. Of course, you have to weigh this with the additional costs involved.
At the end of the year, I always hire a CPA who helps close my books, audit and help pay my franchise taxes and submit my annual report for state and federal. My favorite CPA is Theresa Dave in Boston area.
Yeah, I agree its not the fun part of startup.
It makes sense to invest in an accounting software right away.
Here is a comparison of the different accounting softwares and their costs.
http://www.entrepreneur.com/features/softguide/detail/1,5804,,00.htmlsCat=Accounting/Financial
I do my banking online, so I find it easier to pay all my bills online. That way I can get a report of the months activity. So I prefer my bank to sync into my accounting software. That may not be everyone's needs.
If you have an ecommerce business, it may save costs to find a merchant account who may also serve as your bank for writing checks so you have one less account to manage. Of course, you have to weigh this with the additional costs involved.
At the end of the year, I always hire a CPA who helps close my books, audit and help pay my franchise taxes and submit my annual report for state and federal. My favorite CPA is Theresa Dave in Boston area.
Team - finding partners
I have written about the core team couple times, still I learn something new everyday, so here I am! My advisor Paul English used to have such emphasis on the team that I recall everyday
Your team is important because it defines the success of your company. Since a typical startup does not work 9 to 5, you are likely to see/interact with your team mates a lot, so your overall happiness about your startup depends on your trust and comfort level with your team partners.
When you start with a core team, you all have the excitement about the promise of the product/company. For a set of people to work successfully as a team, you need
(a) a common vision.
This sounds mighty, but you cannot dream and stick together when things pick up speed and offer several options to go in all directions (good or bad) unless you all share the same dream. So you need to have the same vision about your product/service and the joy of solving a customer problem. You may even want to think of a similar timeline and exit.
(b) respect for the team
The whole team should have respect for each other in what the other person brings. This helps the team in the early forming stages to settle down productively with areas of responsibilities, but it may not always be possible to find people with complimentary skills and who know and understand what the next person brings. More important is the appreciation for the team that together you can achieve more than each person alone.
Your team is important because it defines the success of your company. Since a typical startup does not work 9 to 5, you are likely to see/interact with your team mates a lot, so your overall happiness about your startup depends on your trust and comfort level with your team partners.
When you start with a core team, you all have the excitement about the promise of the product/company. For a set of people to work successfully as a team, you need
(a) a common vision.
This sounds mighty, but you cannot dream and stick together when things pick up speed and offer several options to go in all directions (good or bad) unless you all share the same dream. So you need to have the same vision about your product/service and the joy of solving a customer problem. You may even want to think of a similar timeline and exit.
(b) respect for the team
The whole team should have respect for each other in what the other person brings. This helps the team in the early forming stages to settle down productively with areas of responsibilities, but it may not always be possible to find people with complimentary skills and who know and understand what the next person brings. More important is the appreciation for the team that together you can achieve more than each person alone.
Monday, July 18, 2005
Comparing Incorporating Costs Charts - My shortlist Finalists Detailed Comparison
| Company/Site | www.amerilawyer.com | www.bizfilings.com | www.thedelawarecompany.com | www.corporate.com |
| Basic Package | $118.95 | $229 | $299 | $199 |
| DE State Fees | included | $89 | included | $89 |
| Registered Agent 1st yr | $90 every year | 6 months inc then $129 | 1st yr included then $99 | 1st yr included then $199 |
| Fed Tax Payer ID Help basic | $35 | included | included | $49 |
| My Total | $294 | $318 | $299 | $337 |
One more item we need is Certified Copy of State Filed Documents (for open bank acct etc) for which bizfilings.com charges $65, I am waiting to find out if others in my list include it in their basic package.
Another item to consider is the number of shares issued on startup.
Amerilaywers gives a default of 20,000 shares at $.001 par value while bizfilings.com gives 1500 shares at $0 par value. This will affect your Franchise taxes as the min in $35 upto 3000 shares unless you have no assets and use the Assumed Gross Assets method when you pay the franchise fees.
What is the best eCommerce Credit Card Processing System
Understanding the Basics:
First you need to understand how it works
Option1: A merchant account
It comes with several fees. Lot of people don't list all the fees involved so we had to search a lot to compare apples to apples.
Here is a good FAQ about the various merchant fees involved. http://www.merchantseek.com/introguideprint.htm
(i) Setup Fees and Monthly Fees: My goal was to stay away from upfront setup fees and fixed monthly fees as we didn't know what our volume will be so we didn't want to pay $100+ for setup and $20/month without knowing what we'll make per month.
(ii)The second fee is transaction % fee and transaction fee in $/cents. Even 20cents per transaction becomes big if your average customer sale is small. Otherwise this doesn't matter much.
This site is a good search toot to find a merchant acount that works for your business http://www.merchantseek.com/index.shtml
Option 2: Paypal account
I was under the impression that a paypal merchant account will offer only paypal method of payment. They have several options that offers paypal plus standard credit card processing for ecommerce sites.
I like the paypal standard account https://www.paypal.com/cgi-bin/webscr?cmd=_wp-standard-overview-outside
Here is a good comparision of all the options at paypalhttps://www.paypal.com/cgi-bin/webscr?cmd=_feature-and-pricing-comparison
Software Integration Time and Costs
One factor you should consider apart from the fees is the effort (tech resources, time) involved in integrating any of these credit card processing options to your site.
Authorize.net is the most famous merchant gateway software and integrated with Mambo, the coolest Content Management System ever. You'll find many of the options on the net are Authorize.net dealers.
A good referal I've got from a friend was for:
npc.net - However, I haven't been able to get any response back from them to find out about the prices. They just don't want to email or call me back.
First you need to understand how it works
Option1: A merchant account
It comes with several fees. Lot of people don't list all the fees involved so we had to search a lot to compare apples to apples.
Here is a good FAQ about the various merchant fees involved. http://www.merchantseek.com/introguideprint.htm
(i) Setup Fees and Monthly Fees: My goal was to stay away from upfront setup fees and fixed monthly fees as we didn't know what our volume will be so we didn't want to pay $100+ for setup and $20/month without knowing what we'll make per month.
(ii)The second fee is transaction % fee and transaction fee in $/cents. Even 20cents per transaction becomes big if your average customer sale is small. Otherwise this doesn't matter much.
This site is a good search toot to find a merchant acount that works for your business http://www.merchantseek.com/index.shtml
Option 2: Paypal account
I was under the impression that a paypal merchant account will offer only paypal method of payment. They have several options that offers paypal plus standard credit card processing for ecommerce sites.
I like the paypal standard account https://www.paypal.com/cgi-bin/webscr?cmd=_wp-standard-overview-outside
Here is a good comparision of all the options at paypalhttps://www.paypal.com/cgi-bin/webscr?cmd=_feature-and-pricing-comparison
Software Integration Time and Costs
One factor you should consider apart from the fees is the effort (tech resources, time) involved in integrating any of these credit card processing options to your site.
Authorize.net is the most famous merchant gateway software and integrated with Mambo, the coolest Content Management System ever. You'll find many of the options on the net are Authorize.net dealers.
A good referal I've got from a friend was for:
npc.net - However, I haven't been able to get any response back from them to find out about the prices. They just don't want to email or call me back.
Sunday, July 17, 2005
Coola Closing - Lessons Learnt Summary
The lessons I learnt from my first startup Coola are lots.
I am surprised that I learn even today from some advices that I did not follow then, but they come back to me with their full meaning now as I am working on my next startup. My advisor Paul English helped me focus on team building from a startup perspective and pushed me towards being aggressive to find any all players evolvng in the Palm space to hire smart individuals or co-opt with other startups closer to Coola. I understand the value of that more today as I advice some startups more though I followed the advice and built the smart Palm technology team possible at that times.
I'll tell you more on this with specifics as they apply to you, the emerging enterprenuer later.
I learned a lot from just the closing experience. Here's an article sumamrizing my Coola lessons learnt.
I am surprised that I learn even today from some advices that I did not follow then, but they come back to me with their full meaning now as I am working on my next startup. My advisor Paul English helped me focus on team building from a startup perspective and pushed me towards being aggressive to find any all players evolvng in the Palm space to hire smart individuals or co-opt with other startups closer to Coola. I understand the value of that more today as I advice some startups more though I followed the advice and built the smart Palm technology team possible at that times.
I'll tell you more on this with specifics as they apply to you, the emerging enterprenuer later.
I learned a lot from just the closing experience. Here's an article sumamrizing my Coola lessons learnt.
Wednesday, July 13, 2005
Accounting basics
Accounting - Yeah, its important.
Its important to keep your books clean right from the start, so you don't spend too much time during year end tax periods.
Here is a good siteto learn the basic terminologies.
My personal preference is to get a reliable accountant to maintian your books monthly. We had a good accountant who came in few hours every month at $30/hour in Boston. She saves us all the money we paid us by getting us the best tax savings during the year end.
We'll visit taxes separately again.
Its important to keep your books clean right from the start, so you don't spend too much time during year end tax periods.
Here is a good siteto learn the basic terminologies.
My personal preference is to get a reliable accountant to maintian your books monthly. We had a good accountant who came in few hours every month at $30/hour in Boston. She saves us all the money we paid us by getting us the best tax savings during the year end.
We'll visit taxes separately again.
Team is ready, now get a Shareholder Agreement
We had an amazingly good law firm, Bingham and Dana from Boston with my previous firm Coola. That has set a basic standard for me as to what all a company should have when we get started.
I am also a believer of keeping our books clean and maintaining all neccessary documents and complaince. It will make a big difference for a potential buyer if your exit option is to sell your firm.
I find this article by Mike Volker giving the basics about shreholder agreements, so beautifully that it doesn't make sense me repeating it all over again. I also like the fact that he gives a basic shareholder agreement to use as a basis.
Another resource I like is Busines power law site , though they sell legal documents (I am not affiliated with them nor have I used their services) offer three set of shareholder agreements simple, moderate and complex.
You can use this to get an idea and decide what your team needs and then approach a lawyer instead of gettin educated (and scared) by paying an hourly rate to a lawyer. An estimate I have got for a shareholder agreement is basic one for $250 from amerilawyer and 15 hours at whatever rate from a lawyer.
Hope this helps.
I am also a believer of keeping our books clean and maintaining all neccessary documents and complaince. It will make a big difference for a potential buyer if your exit option is to sell your firm.
I find this article by Mike Volker giving the basics about shreholder agreements, so beautifully that it doesn't make sense me repeating it all over again. I also like the fact that he gives a basic shareholder agreement to use as a basis.
Another resource I like is Busines power law site , though they sell legal documents (I am not affiliated with them nor have I used their services) offer three set of shareholder agreements simple, moderate and complex.
You can use this to get an idea and decide what your team needs and then approach a lawyer instead of gettin educated (and scared) by paying an hourly rate to a lawyer. An estimate I have got for a shareholder agreement is basic one for $250 from amerilawyer and 15 hours at whatever rate from a lawyer.
Hope this helps.
Sunday, July 10, 2005
Starting an Ecommerce Business
I shall cover several aspects of an ecommerce business here.
First comes cost estimates.
There are so many options for Merchant Accounts and Credit Card Processing companies.
I like Andy Quick's article about Choosing and Internet Merchant Account. for understanding all the hidden costs involved. I'd recommend using this to project the costs to evaluate whether the big idea that you see is really as big you think. Finally, cash flow will decide if you continue in business or make compromises to exit or take VC terms that you don't like later on.
Another article that gives all the hidden costs is here
You have to find the best option based on your projected sales volumes because what makes sense for you may be different from what works best for another site with different business peaks.
Another note from my personal experience is about being able to retreive the monies out.
In Coola, we setup credit card processing right when a customer was ready to pay. It worked out fine as customers charged and paid online. The difficulty came when we wanted to take the money out to manage our own cash flow. Different companies have different rules for taking the monies(that you have rightfully earned) out based on their own payment cycles which may be once a month.
First comes cost estimates.
There are so many options for Merchant Accounts and Credit Card Processing companies.
I like Andy Quick's article about Choosing and Internet Merchant Account. for understanding all the hidden costs involved. I'd recommend using this to project the costs to evaluate whether the big idea that you see is really as big you think. Finally, cash flow will decide if you continue in business or make compromises to exit or take VC terms that you don't like later on.
Another article that gives all the hidden costs is here
You have to find the best option based on your projected sales volumes because what makes sense for you may be different from what works best for another site with different business peaks.
Another note from my personal experience is about being able to retreive the monies out.
In Coola, we setup credit card processing right when a customer was ready to pay. It worked out fine as customers charged and paid online. The difficulty came when we wanted to take the money out to manage our own cash flow. Different companies have different rules for taking the monies(that you have rightfully earned) out based on their own payment cycles which may be once a month.
Friday, July 01, 2005
Comparing Incorporating Costs
I am talking about a C Corp DE options and pricing here, though the same companies do incorporation for all states or S Corp etc.
Going to a law firm costs around $1500 from my recent estimates.
You can find a lot of cheap options on the Internet. I decided to ask for reference from fellow enterprenuers and short-listed to 4 ptions. What was amazing that everyone thought that theirs was the cheapest and it appeared so as soon as I looked at it. Then I found that each company buried 1 item's cost in their price.
So, here I list the key items I think you need to get on a C Corp DE incorporation and who offers it in their basic package vs charges separately, so you can compare and decide whats best for you.
Items Required and Best Price I found by references
Basic Package
Articles of Incorporation
Corporate Charter
Corporate minutes
Corporate by-laws
Corporate kit
Stock certificate
Corporate seal
Preliminary name search.
Additional items you need unless you are located in Delaware:
You need a registered agent at Deleware if you are a business located outside Delaware. We used CSC Corporation from my previous company Coola and they were very responsive and good. I started comparing options as I wanted one offered by the same company who did my incorporation.
Registered Agent (fees are different for first year vs. subsequent years), so ask for costs involved.
Registered Agent Address on Incorporation docs. This is an add-on to get your company incorporated with the DE Agent address instead of your home address if you are starting small. Doesn't mean anything if all goes well. I found that people wake me up at my home asking questions about why I closed Coola and whether I can help them start the same idea as they thought there was still a market for it. All because Coola was incorporated with my home address and contact and we forgot to move it our offices once we setup offices.
Registered Agent as a corporate office address and forwards mail
Add-Ons needed:
Federal Tax Payer ID Form Filling Help:
(I've listed the basic form price here, most sites offer a service to get the actual Fed Tax payer ID itself for an additional $35 to $50)
General Counsel: I found this nice add-on at http://www.amerilawyer.com for $89.00 if you select it during incorporation or its available at $139 per annum after that. I spoke to the lawyers there and believe they are very responsive and this might be a worthy add-on when u need a lawyer consult dring your first few years before you retain a law firm.
Once you scale and have employees you need the following. You don't need it if you are couple shareholdes working off your homes andhave no payroll or hires yet. (Check with a lawyer on specifics of DE Labor laws)
Department of Labor Registration $35
Delaware New Hire Reporting $35
Going to a law firm costs around $1500 from my recent estimates.
You can find a lot of cheap options on the Internet. I decided to ask for reference from fellow enterprenuers and short-listed to 4 ptions. What was amazing that everyone thought that theirs was the cheapest and it appeared so as soon as I looked at it. Then I found that each company buried 1 item's cost in their price.
So, here I list the key items I think you need to get on a C Corp DE incorporation and who offers it in their basic package vs charges separately, so you can compare and decide whats best for you.
Items Required and Best Price I found by references
Basic Package
Articles of Incorporation
Corporate Charter
Corporate minutes
Corporate by-laws
Corporate kit
Stock certificate
Corporate seal
Preliminary name search.
Additional items you need unless you are located in Delaware:
You need a registered agent at Deleware if you are a business located outside Delaware. We used CSC Corporation from my previous company Coola and they were very responsive and good. I started comparing options as I wanted one offered by the same company who did my incorporation.
Registered Agent (fees are different for first year vs. subsequent years), so ask for costs involved.
Registered Agent Address on Incorporation docs. This is an add-on to get your company incorporated with the DE Agent address instead of your home address if you are starting small. Doesn't mean anything if all goes well. I found that people wake me up at my home asking questions about why I closed Coola and whether I can help them start the same idea as they thought there was still a market for it. All because Coola was incorporated with my home address and contact and we forgot to move it our offices once we setup offices.
Registered Agent as a corporate office address and forwards mail
Add-Ons needed:
Federal Tax Payer ID Form Filling Help:
(I've listed the basic form price here, most sites offer a service to get the actual Fed Tax payer ID itself for an additional $35 to $50)
General Counsel: I found this nice add-on at http://www.amerilawyer.com for $89.00 if you select it during incorporation or its available at $139 per annum after that. I spoke to the lawyers there and believe they are very responsive and this might be a worthy add-on when u need a lawyer consult dring your first few years before you retain a law firm.
Once you scale and have employees you need the following. You don't need it if you are couple shareholdes working off your homes andhave no payroll or hires yet. (Check with a lawyer on specifics of DE Labor laws)
Department of Labor Registration $35
Delaware New Hire Reporting $35
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