Building Momentum from a Standstill

The last couple of weeks, I shared some discussions with a CEO of a services start-up here in Phoenix. She and her team of three were having a disconnect about how quickly or slowly they were progressing. It was obvious that there was a communication break-down, but the underlying theme is that each person's perspective was very different regarding how fast the company was progressing. It didn't help that one of her team-mates thought she wasn't doing enough... Why is it that she was unable to make significant strides on a weekly, bi-weekly basis? I don't have all of the details for her company, but I venture to say that her company and mine are in similar boats.

Momentum is something we all wish to have as entrepreneurs, because this type of self-powered energy that gets a lot accomplished in a short amount of time. But to get to momentum requires that a lot of sweat equity is used in a small amount of time, and time, as usual is something we all have less and less of. Whether it's services or software, her start-up and mine share the same obstacles:

1. full-time day jobs with part-time start-up
2. zero compensation during early start-up phase
3. other ideas??

So the key is to ask ourselves, how do we get momentum for free? That's really the question. I can't speak for her services business (hopefully she'll comment to this blog), but from a software engineering perspective, the current wisdom of the crowd is to get a product out quickly so that the customers can start to provide feedback.

The following post at The Ideal Startup (Engineering) Team blog, speaks to the importance of designing for usability because valuable feedback can be gathered early on. Of course, this begs the question about how we can keep our idea under wraps so competitors don't feed off of it, but that may be a risk we'll have to do. They don't speak about how to acheive momentum for free, but I suspect that if we keep the customer in mind we'll be able to make ourselves design for them. Makes me wonder whether the customer survey that we created months ago should be revisited and actually sent out??

So does anyone have ideas as to how to get past square one? How did you achieve momentum for your start-up?

-john

Lukewarm Response to Presentation

Well, I don't know what happened but the lack of response in the areas which I thought would receive attention is a concern to me. I gave a 7 minute presentation of the business plan with financials and the panelists did not seem very interested in the opportunity.

I could understand if the market growth potential to be a concern, but there were zero questions about the business model. This annoyed me because I spent the most time on the financials and justifying costs and market growth and making what I felt were realistic growth projections.

Did I do such a good job at explaining how we'll be generating revenue that questions didn't need to be asked? Were the revenue models understood when I introduced them? What about how I intended to spend the funding for the seed round? The only question that touched on financials dealt with how my financial projections would be impacted if the initial market focus was made more narrow.

I did receive a question about barriers to entry and how I intended to keep this going. My honest answer was there was zero barrier to entry and I was depending on being first to market.

The other two questions were on the selection of the company name. Two of the panelist thought that the name would a) segregate half of the population because they wouldn't understand it, and b) branding of such a name would be costly because of the consumer would have to be educated.

So what did I learn from this presentation? I learned that as a team, we didn't prepare enough for the presentation. I don't think we understood our audience well enought to anticipate where they'd focus their attention. We didn't practice questions and answers. We didn't do ourselves justice.

Also, I don't think I have the stage presence to connect with the audience. Sure I can do presentations, but I can't sell the message effectively -- perhaps the 7 minute limit is harsh, but a good salesman could have done it in 30 seconds.

No rest for the weary, we're pushing forward,

-john

The 3rd Amigo

Good news, we've added a third person to our team of founders. I've been so busy working on the presentation for next week's pitch that I wasn't even involved personally to recruit this candidate, but my partner did all of the schmoozing to great success.

Now, we've got two strong technical founders and then there's me :-) What I like most about this combination is the strong working history that this new candidate has had with my other founder. The two of them have worked together for about a decade now, and that includes, stints at two different companies too.

I'm looking forward to having all of us wear many different hats of the next year. The most important item on the agenda is next week's pitch at ASU.

-john

Recruiting Advisors

One of the many tasks on my ever growing list of things to do is to find candidates to be advisors for the company. What does this entail? Hehe, this is going to sound like a classifieds ad for date, but here goes.

I would like someone who is honest in their feedback and can take a minute or two to engage me on the ups and downs of doing this business. This person does not have to have business, technology, or entrepreneurial experiences, but should be able to think critically about the business model and other issues. Location doesn't matter, as cell phones and emails work enough, but I do like face to face interaction, so a Phoenix native would be a plus. Age? Well, age doesn't matter at all.

The ideal candidate will be a former consumer ecommerce entrepreneur. She will have had experience raising capital. Finding "A-list" executives. She would have experience dealing with board of directors and investors, the growing pains of growing from zero revenue to $10M, and she would have sold the company for a nice exit.

What can I give in return? My friendship and time, and lots of startup talks for now :-)

Man, that really did come across as a dating ad, haha, but thats the way it goes. Entrepreneurs are match-makers, too, you know?

I've started to keep a list of people and contacts that we know and how we could approach them. So far, the list is mostly family and friends, with a few acquaintances, should be interesting to see how this all works out.

-john

Google: 5th largest company by market cap

You gotta love what the Google brothers are doing in their labs. Techcrunch recently wrote about how the company passed the $700 per share mark on Halloween and has positioned themselves within site of four heavy-weights, Exxon-Mobile, GE, Microsoft, and AT&T.


Just imagine all the brand name companies that are in their rear-view mirror... Walmart and Citigroup, to name a couple.

Financial Model Needs Work

I got some very blunt feedback from a business coach yesterday. He liked my executive summary, said it was well-written, but he thought my growth curve and expenses were unrealistic.

I've been having a hard time making the right assumptions about the business. The number of technical heads, the length of time to produce a widget, the number of business heads for marketing and sales, the number of widgets sold per month, the number of alliances/partners, etc...

This was my first attempt at financial projections and I was trying to fit the business into the hockey-stick curve. Wrong idea. So my next go around in the coming days will be purely bottom-up with less focus on achieving the 10x return on investment after 5 years. We'll see what happens.

-john

Recap of Presentation

Yesterday's 7 Minute Pitch at ASU went well. I'm going to stop short of saying it was excellent, but it was good enough for us to get some hard-nosed questions and feedback. This was a dry-run to make sure that our value proposition and business model can be effectively expressed.

Of all the comments and questions we received, the following sums it up quite well. Paul Rasjski, former VP of marketing at BAAN (which was sold in 2000 to Invensys for $700M), said we piqued his interest and left him with questions as to how we do it, but he also offered a strategic issue that we need to address and that is of IP, and how we may or may not infringe upon a main competitors patent.

Other questions:
- how do you intend to spend the funding upon receiving it?
- what is our value proposition for the alliance partners?

The rest of the comments feedback were about the presentation itself:
- no need to emphasize the demographic and statistics that we stressed as the "problem statement"
- cadence and tone were good, pace as well
- the product feature comparison chart was well received b/c it compared how our offering is different from the main competitors
- introduction needs to be worked to tell a story

There is still work to be done to get the pitch right. I could tell in certain portions of the presentation that the audience was less interested than others... We've got until Nov 5th to refine the message -- that's the full-up presentation in front of a panel, including an angel investor.

-john