Archive for category Miscellaneous
Part 2 of 5: The Tech Wildcatters’ Program
Posted by Steve in Miscellaneous on October 20, 2009
Yesterday, I introduced the Tech Wildcatters micro-seed project in Dallas. Today, we review the program.
Gabriella Draney and Jon Feld started Tech Wildcatters. On Sept 3, I had the great opportunity to sit down with Gabriella and talk about her new venture. I organized her responses into each of these general question categories.
What is the program?
The program will put entrepreneurs through a 12 week program that will be like a mini MBA/entrepreneurial boot camp. Rather than just letting the entrepreneurs get money and go on their own, Tech Wildcatters will start with the basics and examine if the company has the right product. Most inventors/entrepreneurs never take this time and think they have a product. Gabriella’s background with her MBA and experience at a venture fund taught her a lot of the strengths of weaknesses of a typical startup. Realizing that all startups have some weaknesses, typically in product development, Tech Wildcatters want to address these up front. In month 1, they will explore who the entrepreneurs are, why the entrepreneurs are, and the fundamental strategy of their company. They do not want the founders to touch the keyboard again until they figured out something along these lines. They will complete this within the first month.
What is the advantage of using Tech Wildcatters?
Best-in-class big companies use business intelligence, voice of the customer, stage-gate product development processes to create their next products. How can two people working in a garage do this? That is the point with Tech Wildcatters. With their approach they want to bring the big time product development to the small startup.
Why 12 weeks?
The intent is to speed up the first year of business. It takes time for prospects to respond, product development and to market your products. It takes longer to make the right connections because these are often done at events, via introductions that take time, and as relationships are developing. Startup owners often do not have the experience and connections to know how to take advantage of every single day and week. There is a lot of time lost as this is developed. Tech Wildcatters intends to make every day count in an accelerated approach by providing guidance and connections through their own network and knowledge base.
The Tech Wildcatters’ environment will be one of camaraderie and teamwork, but also of high competition. Competition keeps things rolling quickly as teams will feel pressure to perform and make decisions. The environment of working closely with other startup teams will lend itself to speeding up the company’s development. Fear of making the wrong decision often delays many businesses, and this is definitely the case with startups. One of the advantages of working with others is that when you see someone else dealing with similar issues and making decisions it helps dissuade the fear you may have in making a similar decision.
Instead of just giving money, they are going to stack the odds in the entrepreneurs’ favor: close guidance, mentors and collaborators. The program has structure, focus, and the intention of putting the entrepreneurs in the best possible positions for success.
Tomorrow, we will look at their suggestions for the successful fundraiser, which will provide insight into how to get their attention.
Part 1 of 5: Tech Wildcatters, a Dallas Micro Seed Accelerator
Posted by Steve in Miscellaneous on October 19, 2009
An exciting new opportunity is opening up for entrepreneurs here in Dallas: Tech Wildcatters, a micro accelerator is starting up. They just started raising funds at the end of August and this fall they plan to start a boot-camp style accelerator for IT entrepreneurs.
Clarification: This fall is when they will start accepting applications. The first group of entrepreneurs will start in spring 2010.
As you may recall from earlier posts a micro seed accelerator is a company that provides a starter amount of funding, other resources, training and other assistance to entrepreneurs. The other resources may include operating space, access to powerful computers, and equipment too expensive for a startup. Typically, the accelerators take a small amount of stock for providing these tremendous advantages.
Gabriella Draney and Jon Feld started Tech Wildcatters. On Sept 3, I had the great opportunity to sit down with Gabriella and talk about her new venture. I organized her responses into each of these general question categories.
Who will Tech Wildcatters select?
They will focus on IT projects (web or non-web based) or IT enabled services; looking for companies with two or three founders who can spend 100% of their time on giving their project a kick start.
What makes Tech Wildcatters unique?
1. They provide a structured program and not just money.
2. A track record is not necessary. They are willing to place bets on first time entrepreneurs.
3. The product does not have to be patentable but must have advantages that make it best in market to a targeted segment that is large enough to be valuable.
Their uniqueness is what makes this exciting for Dallas. For the longest time I have to tell entrepreneurs that if you never done this before, then without a track record you will have a very steep uphill battle to fight to get funding. Tech Wildcatters sheds a light on this problem and enables that newcomer to get started. It will not be easy for the newcomer but with the proper focus, enthusiasm, good ideas, and experience just executing on something, they have a decent chance. The next few days we will explore deeper into Tech Wildcatters and understand a little bit more about them and their program.
State of Venture Capital 10-12-2009
Posted by Steve in Capitalization, Miscellaneous on October 12, 2009
Bottom line, it has been a dismal quarter for venture capital firms raising money. Total of 17 firms raised 1.557 Billion dollars with three firms raising 65% of that. Visit this link, an article by Jay Yarow at the Silicon Alley Insider to get the details along with a quarter by quarter chart of the last two years.
Yarow writes, “It’s an 81% drop from a year ago, and a second quarter of declines.”
What does this mean?
1. It will be harder to get money from venture capital firms since they are having a harder time raising money. Smaller supply means smaller opportunity.
2. Firms looking for capital will have to fight harder and focus more on the points of my model rather than just wing it.
3. Firms already with funding from venture capital firms will be more likely than firms with out venture capital funding for getting more funding. VCs rather bet on what they know than the unknown. However, this does not mean the money will be easy for these already funded firms.
4. Firms will have to find alternative routes to getting funding; or will have to focus more on organic growth (sales) than anything else to get larger. With this economy it is going to be even harder.
This blog is about how investors qualify entrepreneurs and how entrepreneurs can attract investors. However, if you think about it, if the firm is good enough for investors it may not need them. Ultimately, you can use the information herein to figure out how you can avoid using investors, or put yourself in a better position to manage that relationship successfully.
Hardest part of the business plan
Posted by Steve in Miscellaneous on October 5, 2009
Every part of the business plan is hard to write; but some are harder than others. There are two sections that I think are the hardest.
First, there is the proforma. This needs to be mathematically accurate, provide reasonable numbers, and be comprehensive. Furthermore, it needs to be in a format that the audience will accept. Most people do not know how to do this, so they buy a kit or they wing it.
Second, there is the sales plan. Typically, writers cover the marketing in a general sense, and then say, “sales just magically happen”. They do not actually write that, but the reader can tell they do not have a plan.
The answer to the first is to get an expert. You can get me. More on that later.
The answer to the second is to start with a list. What are the top 20 groups of people you will approach to make sales on a regular basis?
Number One Worry in a Business Plan: Sales
Posted by Steve in Miscellaneous on September 23, 2009
In today’s world the number one worry should be sales. In your business plan, the sales plan (not just the marketing plan) should be the focus. Second worry is the marketing plan.
Yesterday, I wrote that sales was the element that created cash flow. This is what it all boils down to: creating profits from cash flow via sales.
The next business plan you write should have the best section as the sales section.
Turning the Hobby into a Business
Posted by Steve in Miscellaneous, Plan on September 21, 2009
I was at a convention today and sat in on a panel regarding turning your hobby into a business. The question that came up was whether this was a good idea. On the outset you might think so: a person typically has passion and much knowledge about their hobby. This passion would carry them through the tough times and help them generate the necessary impetus to make the business work.
The problem is that typically it is that same passion that gets in the way of clear thinking. Rather than develop a product or service that people want, the hobbyist turned business manager develops something they think is cool.
Another mistake is that this passion typically focuses on the make function. Remember, businesses can be broken down into three aspects: make it, sell it, and manage it. Most hobbyists are involved with the “make it”. Selling and managing is often not in their interest. While it is possible to find someone good at two of those, it is rare to find someone good at all three.
The solution of course is to find someone to partner with that compliments the hobbyist. If the hobbyist is a good maker and seller, maybe they should find someone that can help manage the company? What if that someone can help with shipping the product? What if you find another company to sell the product and you just make it and ship it? There are many possibilities but the key idea is to focus your activities on your strengths (and likes) and find alternate solutions for your weaknesses (and dislikes).
A final consideration is that a hobby by its very nature is a form of relaxation. There are no pressures to perform or earn a living; which in turn increases the enjoyment of the activity. Once this changes, and deadlines, profit margins, and customer expectations set in, the hobby may no longer be a business.
The final verdict is that turning a hobby into a business is good if it done right. Identify the aspects that you like and find solutions or other people to address those aspects you do not like. Understand that you may need a new hobby to help relieve stress. Finally, put together goals, a business plan and even test market the product to see if this is truly something that would work or something that should stay as a hobby that may earn supplemental cash flow.
Will They Listen to the Accelerator?
Posted by Steve in Capitalization, Miscellaneous on September 17, 2009
My first thoughts when I started reading about the microseed accelerators (and especially about the one I interviewed, which will be forthcoming) is that they assume that entrepreneurs will listen. If the entrepreneurs want the money they will listen is the real idea.
This will probably be a great disqualifier. Those entrepreneurs that are not willing to listen or present themselves as unwilling listeners will not make it to the final round of selection. I am concerned about those groups that will fake listening just to get the money.
What checks and balances do the accelerators have? Can they dismiss someone halfway through the plan?
Interesting thought. Stay tuned as we start to explore a specific accelerator starting up in Dallas, Texas.
Why people run their own company
Posted by Steve in Leadership, Miscellaneous on August 27, 2009
People start their own company for many reasons but they often boil down to two:
- They believe they can make more money being in their own business.
- They need to be their own boss.
Very often the second reason outweighs any logic for the first reason.
For example, what if someone started their own company selling widgets for $100. Each one costs them $50, and the overhead costs them $20 each. Profit is $30. Someone else comes along and tell them they can sell under their name for the same price but the costs are $40 for each widget and $10 for overhead leading to a profit of $50. Logic says that the person would take the deal.
As much as it may seem logical, the value that people place in being their own boss and having control of their own destiny often outweighs any profit they may make from working for someone else. There is also the lure that someday they may be that big and make even that much more money. Furthermore there is the sense of pride that someone gets from creating a business on their own. For some they might be satisfied to give this up for more money, but for others it cannot replace that emotional need to manage their own business.
This comes into play when you consider exit plans or consolidating other people’s business under your own. Never forget the need to be your own boss as the motivator.
What is the List of Common Mistakes?
Posted by Steve in Miscellaneous on July 15, 2009
Ever notice how different people make the same mistakes over and over again? After a while you wonder that if these mistakes are so common, why someone hasn’t talked about them.
I am compiling a list of the most common mistakes that entrepreneurs do when trying to attract investors. Already, I have thirteen candidates other than not follow the 14 Rules outlined in this blog. Before I post them, I am going to ask you to submit your ideas to me.
So, what mistakes do you think people make when talking to investors, or trying to get investors interested in their company?
Government business is costly to gain
Posted by Steve in Miscellaneous, Strategy on July 13, 2009
Taking another quick break from discussing executive summaries, since something just cropped up that is worth mentioning:
Every now and then one of my clients has the opportunity to pursue a deal with the government. It does not matter whether it is the local government, state or federal but I always ask them the same thing: have you done this before? I mean, have you worked with bureacrats before. If they have not (and most of them have not) then I often caution them to walk away.
Government entities rarely have the impetus to make it a timely decision or cost effective for you to pursue the opportunities. Typically, they put things out to bid, and expect each bidder to answer their hundreds of questions which in the end they will pick whomever is cheapest and can fulfill the requirements to the minimum. The cost in pursuing these deals often eclipses the profit gained.
Unless the bid request is something you can fill out easily, or you have the time, the infrastructure, and the fortitude to jump though many hoops, I recommend you shy away from government deals. However, once you do get the deal, there are two distinct advantages. Very few other companies will want to jump through the same hoops to get that deal from you, and since you now have the experience (and the documentation) you can pursue other government deals.
You can make money off of government deals… but it will cost you.