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The 2 Hour version of the Sixteen Ventures Start Smart seminar. This special version was created for the Feb. 2009 seminar in Anchorage, Alaska.
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Start SmartPositioning Your Software Venture for Success
http://sixteenventures.com
Agenda
• Pre-Game Prep
• Idea Due Diligence
• Technical Resource Engagement
• Raising Capital
• Missing Pieces
Ideas = $0.10/dozen
• ideas don’t matter; execution does
• people won’t steal your ideas
• you need feedback from others
Pre-Game Prepmental
• Focus
• Failure IS an Option
• Fear
• Motivation
Pre-Game Preporganizational
• Equity
• Software Ventures 101
• Does the Founder need to be a Programmer?
Pre-Game Prepbusiness
• Revenue Model
• Technology Has ZERO Value
Focus
• One Venture at a Time
• Don’t be greedy
• Don’t “hedge your bets”
• but <<famous entrepreneur>> has six ventures going at one time
• he’s famous for a reason; you aren’t. Don’t worry about what he is doing. Besides, he has people.
Mental Prep
Failure IS an Option• Nobody wants to fail but you must know it is
possible
• don’t let the fear of failure keep you from trying
• If you do fail, fail fast
• do the “hard work” early to avoid failure later
• do not hold onto an idea that won’t work
Mental Prep
Fear is Okay
• without fear, you lose focus
• lack of fear breeds sloppiness
• fear is a very personal word, and at this point in your venture, it is personal
Mental Prep
Motivation
• Desperation is the wrong reason to start a business, especially a product-based business
• Looking for an “out”
• Consider Service-oriented business rather than a product-based company
Mental Prep
Equity
• Understanding It; it is much more complex than you think
• Two-Sides to the story
• Until you are ready to engage proper legal counsel, you are not ready to discuss equity
Org Prep
Equityyour perspective
• Equity is NOT currency
• you are too early to be dealing in equity positions
• hold onto as much as possible for as long as possible (this is not greed)
• entrepreneurs often feel like those they bring in “need some skin in the game” as if that will get more out of them
• pay cash whenever possible; it will save you money in the long-run
Org Prep
Equitytheir perspective
• you are asking them to invest in your venture
• equity only pays on exit or buy-back
• without control as well as equity, they are at the mercy of your performance or whims
• cash is king
Org Prep
Software Ventures 101
• ISV defined
• On Premises vs. On Demand
• If its on the web, its a software venture, right?
• Growth vs. Lifestyle
Org Prep
Founding Programmer?
• Not required
• Should be technical (or willing to learn)
• should not learn to program
• focus on the business
• you wouldn’t learn to weld just because you wanted to open a body shop
Org Prep
Early Team Members
• Be Cautious
• Attorney
• Advisor(y board)
• Board of Directors?
Org Prep
Revenue Model
• what is a revenue model?
• 7 different ways to make money
• do startup software ventures need to have a revenue model?
• You can’t know what revenue model(s) to choose at this stage in the game, but you MUST be thinking about it
Biz Prep
Technology = 0 Value
• the fact that you use Ruby on Rails or Java to build your app means nothing
• Postgres vs. MySQL? Who cares
• Ajax UI? Android client? Nothing!
• Solved a problem? Aha! Now we’re onto something
Biz Prep
Idea Due Diligence
• Goal: determine if the idea is a good idea, or a good business
• Ideal Idea
• Validation
• Detailing your Vision
• Presenting your Vision
Ideal Idea
• It Solves a Real Problem in a Low-tech, fragmented vertical market, with few relevant competitors and a proven business model
• Deviating from this rule increases chance of failure
• Adhering to the rule does not guarantee success
• Whole Product Solution, not just a Feature
• No “Me Too” products just to be “in the market”
Market Validation
• is there a market for the product/service?
• Primary vs. Secondary Market Research
• Target Market Identification
• Competitive Research
• Sustainable Competitive Advantage
• Talking to Potential Users
• You Must Be Present to Win
Detailing Your Vision
• Extract it from your brain
• put it into a format that other people can make sense of
• screen mockups, process flows, etc.
• You are not a Product Manager... forget UML, Req. Docs, etc... just draw pictures!
• use this to get feedback, engage technical resources, and/or raise capital
Presenting Your Vision
• Show trusted advisors, colleagues, friends, and family your vision drawing
• make sure that they “get it” immediately from your drawings... if they don’t, refine
• determine minimum features required for version 1.0
Technical Resource Engagement
• Partner, Employee, Consultant or Software Development Firm
• Protect your Intellectual Property (IP)
• Build vs. Buy
• Be True to your Vision
• Hosting / Platforms and Architecture
Raising Capital
• Go-to-Market vs. Raise Money
• Money Talks
• Choosing Investors
• Formal Business Plan
• Exit Strategy
Missing Pieces
• Patents
• Go-to-Market Strategy vs. Marketing Plan
• Corporate Structure
• Operations, Management, Staffing, etc.
Until Someone Pays You, Its Just an Idea
http://sixteenventures.com