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

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

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

Milestone Event

So much has happened lately, it's hard to keep up with the writing.

One: The biggest thing that has happened to us recently is the validation of a test/demonstration. I know, I've kept mum about the idea for awhile, and I will still remain so, but the validation came about 10 days after the test was done, so it was unexpected and awesome at the same time.

Two: We've finished our application to YC's winter funding round and it is submitted. Now we wait for word on whether we get to continue our journey in Boston/San Fran or we just do it here in Phoenix. We'll see which dance we get invited to.

Internal Communication & External Marketing

Open communication was one of the main topics discussed by the team this past weekend. The main issue was our individual intentions and how we wanted to see our venture proceed. Each of us has a different way to get to the end-game, and this topic will have to be revisited again. In addition, we decided we need a way for us to resolve disagreements; go carting, first-person gaming, and inflatable sumo wrestling were suggested.

Then, we discussed in length how our business planning has been coming along, and to be honest, we're barely getting anywhere important. The reason we believe this to be is that the most important part to a business plan, at least to us, is the marketing strategy. We've focused on the other parts and have largely ignored the marketing plan. Studies have been conducted and many articles have been written about software companies with very promising technologies that ended up going bust because the market was not sufficiently tapped. If we can't get to our customers, we'll never generate revenue. So my task for the coming weeks, months, will be to focus on how to get to our target market, the steps we'll have to take, the money that will need to be spent, and the trade-offs to be done.

-john

Condor: Recap Business Counseling Mtg

Yesterday was our scheduled meeting with SCORE. The purpose for meeting with them was to help us answer three questions:

1) which business structure is most favorable for investors?
2) how do we request seed-capital?
3) how do we determine the valuation of our venture?

So here is how the meeting went...

The meeting was at noon, but I stopped by on the way to work to drop off the draft Condor executive summary for Jim Batz to read prior to the meeting; his expertise is in business planning and manufacturing.

Our Background
His first question for me was about my background, particularly education and current job. Fine.

Then he wanted to know about why I was there? I laid out the three questions that we wanted answered and then we started talking about the business model.

Business Model
A half hour discussion about the business model with him trying to understand how he would make use of it. He asked, "so after this occurs, then what?" Good point, I had never made it clear in the executive summary, and had always assumed that readers would understand what would happen next. Jim's uncertainty meant that we need to include this critical step; good.

Commitment Level
He looked at the executive summary and mentioned, "You're asking for this much money." I explained that it was an early guess at a need and that it was a placeholder value in order to complete the draft executive summary. He then asked, "will you be quiting your job?" Of course I said yes and that was what he wanted to hear.

Purpose of a business?
Uhmmm, I replied, "to make money". He remarked that making money is the result of doing business, not the purpose. My second response was the right one, "to meet the needs of the consumer." He emphasized that we need to always keep the customer's needs understood and met. Fine.

Then we spent the rest of the session focused on what to do for a business plan. He gave us some forms to review and to do -- homework for the next meeting with him.

Who makes the decisions?
He remarked that we have three cofounders... he wanted us to know that someone has to be able to make the final decision. Okay.

Corporate Structure
He referred us to some online sources to understand the different structures, but remarked that we may want to consider an LLC umbrella company with sub-companies under it.

Financials to Valuation
He explained briefly what we need to do to get our financial projections started. This exercise will feed directly in doing our valuation, question 3. This value is also driven by our business model, How do you add value to the market by using your business model?

What is the ideal business going to be 3-5 years from now? What are the things that need to be in place at that 3 year timeframe? Looking out and working backwards, we'll be able to know what internal and external pieces have to be in place to achieve the ideal system. This vision core + ideal will allow us to cost the core capacity and capability. Capacity + Capability = Cost

We'll have to calculate different capacity levels to help us crunch our numbers for different financial scenarios. 100%, 80%, Reasonable Guess, and Break-Even. If we can't succeed at 80% capacity, we shouldn't be in business. This being said, Jim has a manufacturing background and I am not sure how well running a server at maximum capacity will fit into this capacity calculation. Especially since we're thinking of scaling our infrastructure using a hosted model. When we get to this part of the business plan, I'll be sure to work with Jim to iron this out.

So once we understand a maximum capacity, we will also know the maximum capability. This will then allow us to figure out what the cost will be to have a system running full-bore at 100%. We'll be able to cost bandwidth, hosting, rent, salaries, etc... Add up the numbers and that is the cost of running the system. I'm a little unclear though, how to go from this point to the valuation, but we'll get there.

What is your hamburger?
McDonald's sells all sorts of food, but they are identified with hambugers. That being said, what is our core offering, such that Condor will be identified by that service?

Homework/Research
There is a lot for us to review and work on individually/together so that we can all be on the same page. Business entity, corporate structure, licensing, insurance, getting a lawyer, etc...

Next Meeting
I scheduled the next meeting for Oct. 24th at 11am.

To Do List
There is a lot to do yet; this never changes. We should try and meet this Sunday to review our personal expectations for the business, our roles, etc... Setting aside the project for now, what is it that we want from this business and how each of us thinks we can get there.

That's it for now!
-john

Survey Feedback & Planning

I've got a three-pronged attack for this survey. Feedback loop, administering survey, getting the word out.

The feedback I've received about the survey questions have varied greatly. Most people thought the questions were good, but that sort of feedback doesn't provide much info to me. I did receive two useful emails which pointed out a wording flaw in the survey.

The wording at issue is similar to the following example survey about ballroom dancing experiences,

Question #1 Have you ever done ballroom dancing? [Yes, No]

Question #2 How would you describe the first time you doing ballroom dancing? [text box]

Question #3 Would you be interested in lessons? [Yes, No, Maybe]

This may seem well and good to you, but it isn't ideal. If the respondent selects No for the first quesiton, then the following questions wouldn't make sense and would be awkward to answer. That's the issue I have to fix with my questioning.

I downloaded an open-source survey script, called Ask People, to administer this survey. I also added a Google Analytics script to this survey so that I can capture traffic details (location, new or returning visitor, etc...) while the survey is being taken. I intend to use the results of the survey and the traffic information to help paint a good picture showing the opportunity at hand. This may help me with recruiting :-)

The survey wouldn't be any good if I don't get the word out and pull favors. Part one is to email my friends and family to ask them to take the survey. Two, I will also ask them to forward the survey to their contacts. Three, I will be asking friends who use social networks (myspace, facebook, friendster) to post the message out to their network. Ideally, I'll get several hundred results from around the country. We'll see.

-john

Differing Goals

It's been another learning experience this week on how to manage people's expectations and personal interests. After the team meeting on Sunday morning, we left with differing views on what/which idea would be the main objective for the team.

We had two differing camps: Condor or Doberman. Though the Condor idea continued to evolve, this time to remove a critical differentiator for the idea, my gut was still telling me that Condor has a real market opportunity. Doberman was being favored by RG because it was more byte-sized and the expectations for a high-tech solution are lower. I don't think we agree on the size of Condor's market or the problem-space that it may solve. For you readers, I haven't explained Condor and Doberman on this blog, yet. Remember, I only reveal the details after I've set the idea on a shelf and have moved on; see ideas Angus and Bison.

We talked it over again and we came up with a gameplan. We will focus on getting Condor's concept and perhaps a demo ready for the Y Combinator Winter Funding Deadline of Oct 11th. The sooner we get this application into them, the sooner we can apply our energy towards launching Doberman.

The reason for two separate approaches is to appeal to the investment/networking opportunity at YC. Condor may have a greater upside, though it would require more time to implement, so unless we're funded by an angel for a few months, allowing us to quit our day jobs and bang out the product, Condor will have to take a back-seat to Doberman come October. Doberman on the other hand is almost too easy. The upside and potential isn't as great, and since the concept is very low tech, I can't imagine YC would be interested in the venture... Imagine, the solution requires a person to be involved with operations, too!

- I sent out the Condor survey for comments yesterday, so we'll see what feedback we get.
- I borrowed DE's PHP and MySQL Web Dev book, looks like I'll be coding this weekend.

The fun continues!

-john

Retool Condor; introducing Doberman

Here's a recap of what happened over the weekend:

Survey
I completed a draft of a customer survey and posted it in our google group. There were three sections to it: set the stage for the customer, ask about experiences, offer a solution.

We want the customer to be in the right mindset prior to filling out the questionnaire, so by giving them a short story/description, we are able to get them to focus correctly. We'll then ask them about their experiences and how they liked or disliked them, finally we'll offer the possible Condor solution and inquire whether they would use a service such as Condor. And ofcourse we'll gather demographic info and gather their level of interest on being an early adopter of the service.

Meeting
The team got together on Sunday morning to discuss the deal-breaker issue for Condor. This being the need to establish 3rd party partnerships to make the service even work... Research was conducted and we found some information which states that this sort of arrangement is unlikely to happen because it places undue risk and liability for the 3rd parties. This being said, the survey draft was not that important anymore and our focus changed to how we could retool the idea to reduce the liability for the 3rd parties.

Doberman
While thinking about how to change Condor, Doberman was born; I've written an initial concept in the google group. Doberman plays in the same arena as Condor, but is sufficiently different enough to be treated seperately. It may be the case that we'll combine these two ideas as a single plan with phased implementation; I think investors may like it better that way :-)

That's all for now, lots to ponder still. I need to get more comments on the survey though.

-john

Condor: Status

Here's a quick recap of what we've accomplished since my post on Aug. 17th:

Technology
- I did two installations of the same open-source script on my LAMP server at home, calling them site A and site B, respectively.
- DE and I met last night to see how we can forward data from site A to site B; he had a copy of Apache2Triad running, btw
- We soon realized that our attempts to capture transaction data from the session token was not the way to go because it was too cumbersome. Instead, we'll have the data stored on a local database. We can then query for the information when we need it and then repackage it prior to sending it out to a partner site.
- There is still a lot more to figure out, including coming to agreement on the concept of operations.

Business
- I emailed various organizations with whom I have affiliation about their business resources
- my engineering adviser/professor at George Washington University
- the entrepreneurship club at GWU
- the alumni association at University of Maryland University College, for alumni living in Phoenix

Additional Task
- Address investor risk, specifically market risk. To do this, I am going to produce a survey of potential customers. More details on this in a later posting.

-john

Condor: Near-Term Planning

So here is a preliminary game plan looking forward a couple of months. There will be many more things to investigate, but here is a quick list:

This week
- setup two sites for testing out a proof of concept

1 Month
- complete a proof of concept; the team members have agreed to help at various levels.
- begin looking at which retailers would be most willing to work with us
- discuss with advisers about how we can get retailers to cooperate; I already scheduled an appointment with SCORE for Sept 12th.

2 Month
- apply to YC with demo sites
- attend Launch Prep course at ASU Technopolis; I already signed up for it, starts mid-September
- see if thru ASU Technopolis, we can get an introduction to demo our idea for an angel; I'd like to get enough money to be able to work on the project full-time

I'll work on the two sites this weekend and hopefully beginning of next week we can start to do some mods and tests.

-john

Condor: Prelim SWOT; Plan Proof of Concept

I just got back from a weekend camping at the south rim of the Grand Canyon. 'twas a fun time, but now back to business... {the full version of this posting is in the google groups page}

Direct Competitors?
I did an initial search for companies that do the same thing as Condor -- none found so far. Not even those {cut} have this kind of feature.

Alternative Competitors?
These are the alternatives that might take away a customer. For example, if we were in the automotive business, an alternative competitor may well be public transportation and cycling. As for Condor, the alternative for consumers is to do things the old-fashioned way -- {cut} (If you haven't read what Condor is all about, please do so in the Pages section) That answers two of the hardest parts for a SWOT.

The Opportunity is to fulfill a consumer need and to provide convenience.

As for the Threat? There is no direct competitor and there is no alternative. There will always be copy-cats (so no biggie). There is always the risk of a slow rate of adoption. These last two points are pretty much a part of any Threat analysis, so overall, I'd say that Condor is a high opportunity and a low threat.

Proof of Concept
I think with Condor, I will actually spend some time looking at how a proof of concept can be thrown together. Why focus on this now? Since Condor's business model is so easy to understand and the opportunity is more apparent, I think it would serve us well if a proof of concept were put together. At the very least, I will document my train of thought, and if you ever want to comment, please do.

The 10,000 Feet View
{cut}

Condor at 10,000 feet will need to do the following:
{cut}

3rd party {cute} site will need to do the following:
{cut}

More thinking to come, got to leave for the cubicle farm.

-john

Condor: v1

Alrighty, concept Condor is available for reading. I'm testing out this versioning option for the Group Pages. So you'll have to read about Condor from the Pages section of our Google group. We'll see how well this works, if it is cumbersome, I'll just go back to the way I've been doing it and put the content in the discussion pages.

Condor is so straightforward, it's short and sweet.

-john