Return

I’ve been away focusing on a new startup idea for the many months since I’ve been absent from blogging.  I’m happy to say that I’ve been able to assemble a team and almost have a beta product ready that will be released this Fall 2008.  If you’re interested in taking a look shoot me an email.

STAY tuned for more updates.

Best, John

When Quality Matters most

So my wife receives this invitation from the ASQ for BOSCON in the mail yesterday.  This is for the American Society of Quality’s meeting in Boston.  I glance at the back and see the following:

 

 

 

See anything amiss?

 

Well neither did the folks that are supposed to be experts in quality – the irony of it all!  No wonder many things we thank for granted aren’t done right anymore.  I hope that anyone going to this conference doesn’t end up in Denver instead of Weston, MA. 

 

Since I’ve managed many teams and their associated quality assurance personnel – its very important to roll up your shirtsleaves as a manager and just hop in with them as well.  They’ll appreciate it – trust me and everyone on the team will feel better about not having produced something like this  

Survival in a box

So I’ve had this box of Sopakco Surepak MRE’s,  made for the military they provide lots of calories and a ready to eat meal out of the pack.  They are supposed to have a shelf life of about 5 years, I’ve had mine for about 2 years.  I have it just in case of an emergency and it works out as a very good insurance policy with one box of 12 meals being about $70.  You never know if the snowstorm of the century will show up or something else unexpected.  In these “extreme” but certainly non-probable situations I really wonder if money will have any value but a box like this could save your life.

 

Anyways, I’ve never tried any just kept it in my basement.  So now I’ve decided to eat it to see if its worth ordering a new box to last for another few years.

 

Am I a little hesitant about eating food that’s been in storage for 2 years at room temp?  Yhea – so that’s why I need to try it  

 

Ok first on the menu are some crackers and cheese spread – not bad though the cheese is a little pasty.  No bad reaction at all.  So onto the main portion!  Now this pack says it has boneless pork ribs and rice – wow sounds really good.  Warm it up in a pot with a little water and then take the first bite….

 

Hey not bad, tastes pretty good actually with a good amount of salt in it.  The rice has a good rice texture not crunchy or hard and the ribs seem more like compressed meat but are quite tasty.  I can see myself and my wife eating these no problem.  It has a nice drink with it – apple spice powder just mix with water which tastes like slightly watered down apple cider.

 

Now after eating this I’ll wait and see how I feel tomorrow

Do you love what you’re doing?

I caught part of an interview on a cnbc show called The Big Idea.  Donny Deutch was interviewing a model about her reasons for stopping modeling and moving into a line of cosmetics.  She pointed out that she loved face care products and had no hesitation to stop modeling to explore her love.  

I think the problem for most people is a) figuring out what you love b) having the confidence to go forward with your love vs your safe but not loved job/career.  A – is not as simple as it sounds – sure you may love watching tv but can you translate it into something meaningful from a business perspective.  This connection of translating your love into something of value is the part I think that stops most people going to B.  It takes alot of creativity and determination to do it.  

Another tv snippet I caught (hmmmm maybe the tv is telling me my destiny?) was from Wendy’s founder Dave Thomas.  He said when he started Wendy’s people told him no one wanted another burger place – he said he didn’t listen to those people because its the kind of burger place that he wanted to eat at but didn’t exist.

So don’t let others determine if what you love is right for you to pursue – figure it out for yourself and I think you’ll be plenty amazed at how your whole perspective can change.

Great Startup Tips

Centernetworks has a great compilation of tips from startup entrepreneurs. Definitely worth a read for anyone going down this path. Personally I am going to check out the library option suggested by Alison Covarrubias as a free place to get away from my home office.

The blob and logos

I’ve recently noticed a pattern in company logos.

Why?  Because for the survey I recently sent out I was considering making one and decided to just modify an old company logo that I had used from a while back.  But in thinking about it I ran across 2 logos that seemed strikingly similar to me one from thegorb.com and the other from crocs for croslite.

Take a look:

Now this growing 3 blob circles at the left look strikingly similar.  It makes you wonder if thegorb’s logo designer saw it somewhere and presented it to that firm as his own or if he really came up with it himself?  The little ™ on the croslite from crocs is clear warning that you better not mess with looking like their logo!  Or was it the other way around?

So after paying for someone to design a logo it would seem appropriate for them to include in the contract that the design is his own and all rights are assigned to you as the purchaser.  As an entrepreneur I would be seething right now if I paid to have a unique brand logo made only to find out it was not so unique.

Survey Results

So I’m quite pleased by the response rate on my survey. It achieved a 2.89% response rate as of today with only a .89% opt-out rate. While this seems low, I think its great response from people who have never heard of your company before. I did use a few tactics to increase the response rate though – and no none of it involved increasing the amount offered for filling out the survey.

First, I modified the title which was originally a more subtle play on the reward and activities that the survey audience conduct. I changed it to a direct simple statement in the title. This seemed to help somewhat as the response rate went up.

Second, I objectively looked at the body of the email and thought if I received this it would add alot of weight if there were more about who you are that adds credibility to you. So I added in 3 words on the previous company’s I worked for so that the audience would know that the founder has credibility within their industry. This did wonders as the response rate shot straight up.

Never discount the need for a bridge or connection to accomplish what you need done.

I’m back

My son was born on July 12th, his name is Thien.  After readjusting our routines, my wife and I are now in much better shape.  I never realized how little sleep you actually need which is good for my helping with Thien and researching new ideas.

Recently, I have been working on a comprehensive survey to validate the business need of one idea.  Conducting an online survey is really easy – creating one that actually has your audience fill it in is another matter altogether.  The formula that has reached the highest success for me is to be straightforward in the title – no gimicky approach; also personalize it – I’ve been using their first name; last provide some credibility on who you are so they can relate better to you – in this case I provided some of the past companies that I have been with to establish more credibility than the name of a startup they have never heard of.  I also think the amount of compensation does not directly correlate – I initially wanted to do a $20 Starbucks card but my friend Nancy convinced me that $10 is more reasonable and the extra amount would make no difference.  I am also amazed out how frequently folks move – email addresses that were valid very recently are no longer valid – as people move very frequently.  I wonder if jigsaw and other contact services are able to update their databases quickly enough – it must require tons of automation and an army of personnel to assist.  My goal is for 10 responses to the survey so I can further validate the current idea.

Will be out for a while…

Just so you know I haven’t disappeared, I am expecting another startup – our first baby shortly. So I will not be posting for a while to concentrate on this great, new project. I will be back soon with more interesting thoughts on what I have been up to.

Boston – ENET – Raising Money Meeting Review

I recently reached a fork in the journey of life. It began with my interest in startups and a desire to refine several business ideas I have been exploring. However, I really wanted to understand the funding marketplace much better and what potential investors are really looking for. When I found myself going to a few events that Mark could not make it to, I thought it would be great to share what I learned on Marksguide. As fellow entrepreneurs we all understand how hard the path is – the least we can do is to make sure we watch out for each other.

The first event I went to was held on April 3^rd 2007 – The Boston – Entrepreneurs’ Network event titled “Raising Money from Angels & Venture Capitalists” This is a regular event put on by the special interest group of the Boston Section of IEEE. Check marksguide.com for when the next one will be

Event Format

This event was held at the very nice Forefront Center in Waltham. This is a great meeting room within the corporate complex. It was very well attended with approximately 120 people. I especially liked the “color dot” concept so that attendees could immediately identify your intentions just by looking at your badge (Red-Entrepreneur, Green – Investor, etc…). No need to do the standard (fill in the name) what do you do? This helped make networking a breeze – be sure to arrive early to mingle and enjoy the plentiful snacks.

The structure of the event is the standard moderated panel. In this case we had 3 panelists (a venture capitalist, an angel and a startup CEO) and the moderator – Les Brown (who did a superb job as the mc of the event). So onto the main event…

 

Presentation

The VC’s Perspective

Paul Tu from the Massachusetts Technology Development Corporation went first representing the VC perspective. He stressed that from the VC perspective investing is an art and then outlined what he viewed as the perfect startup presentation. I will summarize his recommendations below and the slides are available online:

 

1) Pitch – no longer than 30 seconds ideally 10 – it’s the hook that gains his interest

2) Problem – define what pain you are solving. Try to define how big it is without generalizing to terms like the Fortune 1000 which have 18-24 month sales cycles. Highlighting specific customers shows you know the market. It is also important to treat early stage customers as investors.

3) Solution – define your value proposition to the problem. This should ideally identify why the potential customer cannot live without your solution. He also stressed here to talk about benefits not features which is a common trap. Lastly speak in lay terms with no techno jargon so that you don’t lose your audience.

4) Proprietary Position – tell why you are different and explain your barriers to entry, patents and future products.

5) Competition – don’t say you have none. Every business has an enemy and you will insult a VC by saying you have none. List 3-5 competitors and your advantages.

6) Market Execution – VC’s know you are in a very early stage, but they want to see how you will win and sell. They want to see that your financials account for what you will need to execute. He also wants to see that you understand the sales cycle by defining who is the decision maker; what is the customer’s purchasing cycle – show that you really understand the customer.

7) Management Team – To Paul its all about execution and not the technology. He suggests that you assemble a team with strengths that complement each other. Currently it is very difficult to find good people to hire so he says you have to be creative. Last he likes to see entrepreneurs participating in the risk by focusing on the money last.

8) Use of Funds – ask for 12-24 months of funding for what you need, not the minimum offered by the VC.

9) Exit Strategy – before making an investment the VC wants to know how to get their money back. You should define who would buy you, when and why. He suggests finding public comparables.

His parting thoughts were that no one will write you a check at the first meeting. Your goal should be to be invited back for further discussions. This is much like dating in that you don’t just get married on the first date! His final suggestion is to make sure that you have fun making money. This is a very wise suggestion that all entrepreneurs should take to heart. There are enough companies with well paid personnel who wish they were doing something else.

The Angel’s Perspective

Norman Strate is an Angel investor. His presentation gave much insight into how an Angel thinks. He did this by relating stories of his encounters with startups seeking angel funding.

• Green lasers – he told a great story about a presentation where it was all about the technology with no mention of how to sell it. When the presenting team asked if he wanted to see their green laser equipment he said no. This resulted in the presenter, who was near tears, to call him a “meanie”. Great example of losing your audience’s interest by not understanding why they are there.

• Music company – at another interesting pitch by a startup, the founding team began by talking about what kind of cars they wanted and the limit to the hours they would work. What interested him about the company was their marketing plan but they lost his interest by not being entrepreneurial enough or committed to their startup. I can’t even begin to understand what entrepreneur in their right mind is going to bring these topics up when seeking funding.

General Advice

• There are a significant number of VC firms that will not invest in Angel funded companies. Bear this in mind so you can understand who you want involved with your company.

• All Angels are different. On one deal another angel told Norman that he wanted to interview the management team all day once a week. Norman did not view this as a good use of his time.

• I asked the question on what motivates Angels beyond the money. His answer was it really depends what interests them. I believe this is really based on their past interests and how they can still be involved with companies and aid them in a more hands-off way.

• The other interesting phenomena is that the VC’s are moving more upscale in what they invest in while the Angels are filling in the lower rounds. These lower rounds are typically in the $1-2 million range.

• Angels typically do not talk to someone that is not referred. His analogy was if someone walks up to you on the street and asks for $10 will you give it to them vs if your brother asked. Again its about networking and who you know to assure that it is someone that can be trusted to talk with.

The Startup CEO’s Perspective

Douglas Daniels is the President and CEO of Hyrocision. His presentation concentrated on the successful steps a startup should take to raising funding.

On Raising Money

Doug’s general advice was that as the CEO you can never stop fundraising so you should get over it as its your first charge as the CEO. He suggests that you have a raising strategy that outlines all the money you will need over the life of your firm to take it to an exit event. The VC’s typically want to put a lot of money in early so their stake will not be diluted so you should plan on this when talking to a VC. Take a look a the presentation slides as he has a great step slide showing milestones to valuation to funding requirements – I think every startup seeking funding should include something this clear and easy to understand. His goal is to provide a 3-4x return on original investment.

In determining what to look for in an Angel he suggests look for those with great industry contacts, deep pockets, good venture contacts and a reputation for integrity. To determine your exit value look at historical multiples on deals in your industry. Be certain these numbers are reflected in the assumptions on your financial projections.

On Execution

In the past Doug was an executive at Boston Scientific where he would see many cool technologies from startups but he could not determine how to make it into a product. Cool technologies do not equate to products that customers need or want. If you are not talking to competitors all the time and early – you should be as you want lots of options to create an auction when it is time to exit.

If you can assemble a seed round with 2 right founders then you are aces in his book. You then need to line up more of the right people for later rounds and assure that you have a slow burn rate to refine and deploy your solution.

Summary

In summary this is a great forum for learning the ins and outs of funding your startup. On a scale of 1-10 I would give it a 9 overall for how it is run and the knowledge I learned. What would it take to be a 10? How about a nice seed round check in hand Now back to refining the business plan and presentation using all these great points…