There are many reasons why one would choose to be an entrepreneur. Here are some common ones. Please add to the list in the comments.
- I hate working for big companies, want to get out of my cubicle and be my own boss
- I want to be rich and have my own airplane
- I have spent the last 5 years in grad school creating this technology and want to build a company around it
- All my friends are doing it
- I read Techcrunch and it sure looks easy
- I cannot find a job, so I wrote a business plan instead
All of these are perfectly valid reasons to become an entrepreneur. Whatever motivates you to work hard and push the envelope. But I want to suggest what it really takes. If you want to launch a successful startup, here are the two most important skills required:
- Can sell
- Can develop a product
The critical fact – if you cannot do one of those things, you are not likely to be a successful entrepreneur. Let’s say you want to build a software startup. If you cannot write brilliant code and are not extraordinarily good at selling software, but are just the idea guy, stop. You cannot outsource these things. Spend a year or two and become a first class Ruby (or PHP) developer. Or go sell Yellow Pages ads for a year and learn how to truly sell.
The ideal scenario is to have a partner that has the complementary skill. If you’re a product guy, go find a kick-ass salesperson to be your cofounder. Or vice-versa. It’s always best if the product guy cannot sell and the salesperson cannot write software. You want your salesperson to wake up every morning thinking about who they’re going to sell to. It is always easier to write code than make a sales call. This temptation by itself can destroy a startup.
It is my contention that if you cannot either create a product or sell it, then you don’t have the right stuff to be an entrepreneur. You had better have a very large checkbook.
This is a reprint of a post from the VentureLab blog – December 2008.
When building a startup idea, it is critical to think through your business model. How do you trade your widget or service for cash? There are some good ones, and there are some bad ones.
Having spent some time with Startup Gauntlet, Pitch Camp and Startup Riot, I’ve had the chance to see some really terrific business ideas. And some remarkably bad ones too.
Here are a few models to avoid:
Spaghetti: “We have five ways of making money.” If one model is good, isn’t five better? This is like a football team with three quarterbacks, they really have none. Don’t throw spaghetti against the wall to see if one of them will stick. Pick the most compelling model and focus on that.
Field of Dreams: “If we build it, surely they will come.” One of the worst things to ever happen to entrepreneurship was the horribly, horribly misleading quote – “If you build a better mousetrap, the world will beat a path to your door.” Uh, no, they won’t.
Boil the Ocean: It’s good to think big, but don’t think too big. You need to prove you can be successful with a few customers and then scale.
China: “If we can only get 1% of the Chinese market for our widget, we will be a billion dollar company.” Sure you will. Where do I sign up? Pick a small market and a way to dominate it. If you can’t find a way to do that, redefine your market. Whatever market you go after, you must be a leader.
Venn Diagram: “We will build A. People want to buy B. We think they might overlap.” Maybe. Probably not.
Bill Clinton: The man from Hope. Hope is not a strategy.
Do you have any other favorites? Send them to me and I will add them to the list.
Coming soon to a blog near you – some really good business models.
Who will be there?
Stephen Fleming, the new Vice Provost of Georgia Tech’s Enterprise Innovation Institute and many of ATDC’s staff will be on hand to discuss the new ATDC.
What’s the agenda?
While there will be a short introduction, the majority of this event will be us listening to you! Our goal is to hear your suggestions for how ATDC can best help Atlanta startup entrepreneurs see the most success.
Why should you come?
If you are running a technology startup in Georgia, you should definitely plan to attend this event because this is your opportunity to provide your ideas, thoughts, and feedback as to how we can best help you build a successful company.
How do you register and find more details?
In anticipation of the demand and to ensure as many can attend as possible this event will be run twice on August 20th. Feel free to register for whichever session best meets your schedule as Stephen Fleming and most of the ATDC staff will be on hand for each event.
Click here for Open Forum 1 (3:00 to 5:00 p.m.)
Click here for Open Forum 2 (7:00 to 9:00 p.m.)
Special thanks to Atlanta Web Entrepreneurs for allowing us to take over their next meetup! We’re holding Open Forum 2 during AWE’s regularly scheduled monthly meeting. Thanks!
Over on my personal blog I just wrapped up a series of posts on the stages of a technology startup. The purpose of the series was to offer a framework to explain the operational stages of a startup to entrepreneurs. Like any framework it generalizes the complex and removes precision. I thought it would be a good idea to summarize them here. You should hit the links if you are interested in learning more or adding your thoughts.
Concept Stage
Key element is creating the basic value proposition and testing it in the market. One or two people, working part-time. No product.
Seed Stage
Key element is product development. Business focus is researching potential market opportunity to refine the business model. Product is raw but customers are using it. Perhaps a full-time person. More if some type of funding or revenue is garnered.
Early Stage
Key element is market development. Proving that customers are willing to use and pay for your stuff. Business focus is sales and marketing. Whole product is complete. Team is growing, there are employees. Revenues exceed $500k.
Growth Stage
The key element is scale. Business focus is accelerating market adoption. Whole product is being extended to address new markets. More then 30 employees. More then $1 million in revenue.
That’s one of the essential questions we help you answer in our upcoming educational program CapVenture. CapVenture is a six week long, boot camp that will educate and equip early stage CEOs and executives to better manage and fund their business.
If you’re actively seeking funding or ever expect to, this is an essential program for you. You’ll get a inside look at the minds of venture capitalists and angel investors with an experienced team of investors, CEOs and industry executives. You will create a fundraising strategy, practice and sharpen your investor pitch, and at the end of the program, give your pitch in front of a room full of investors.
But CapVenture is not solely focused on fundraising. For entrepreneurs not looking to raise capital, CapVenture offers a unique opportunity to develop their business model, sharpen their go-to-market strategy, and enhance their network by sharing with and learning from a room full of CEOs, executives and investors.
We are still accepting applications to CapVenture through July 15th. So, if you’re interested, or know someone who might be, fill out an application.
Entrepreneurs, if you sell your company tomorrow, do you know how much you would make? Do you know how much your investors make? How about your employees? Better yet, you're raising a round of funding and you just received a new term sheet. How does this change everything?
The Liquidity Event Proceeds Calculator ("LEPC") was developed as a
joint project between the Atlanta Technology Development Center (ATDC)
and Siavage Law Group, LLC with assistance from Atlanta investment
bankers Croft and Bender, LLC. The LEPC provides users with a
comprehensive understanding of the effect of their particular venture
capital deal terms. It allows the user to input valuation, option pool
size, amount of investment, and amount and timing of the liquidity
event in order to customize various scenarios to the company's unique
financing circumstances. The LEPC projects the proceeds to be derived
by common holders, preferred holders and option holders in liquidity
events at varying valuations and varying time periods. The assumptions
are listed on the first page and the tool proceeds through three
pro-forma rounds of funding, A, B and C. In order to gain a working
understanding of the tool, we recommend that users review the
spreadsheets as written first before they modify the assumptions to
suit their needs. Each of the rounds has a pro-forma liquidity event at
increasing dollar values that can be modified by the user.
Successful entrepreneurs think differently. They are better at recognizing and dealing with what they don’t know. They proactively identify business risks and uncertainties and mitigate them.
This is a process that can be learned. Join us at the next TAG/ATDC Entrepreneur’s event to learn how.
The session will be led by Marty Gupt, Managing Director of CAP Consulting Group. CAP Consulting helps entrepreneurs become big companies and helps big companies become more entrepreneurial. Prior to this, Marty was Vice President and General Manager of TeraText Solutions, a division of SAIC. He has over 20 years of experience with Pricewaterhouse Coopers, BellSouth, AT&T and Xerox, and has extensive experience in developing new products and businesses. Marty has an MBA from the University of Rochester and a BS in Industrial Engineering from the University of Buffalo.
Following up to my previous blog on Shotput Ventures, SPV just announced their first Demo Day. Eight early stage companies get to show off the fruits of their labor. It's an invite only event for angel investors, VCs and tech execs. Email to info@shotputventures.com if you'd like to attend.
Look forward to seeing you there.
When venture capitalists or angels are considering investing in a company, they ask many questions. Their questions usually are focused around understanding the four basic risk startups face.
- Management Risk: Investors are trying to understand if you and your team are the right people for this opportunity. Key questions:
- Do you have deep experience in the industry you are entering?
- Do you have previous startup experience?
- Will you listen to advice from your board?
- Technology/Product Risk: Investors are looking to see if you have a good product that will give your company a competitive advantage. Key questions:
- Is there any intellectual property around the technology, such as patents?
- Is it difficult for your competition to replicate your product?
- Does the technology actually work? Is it defensible?
- Market Risk: Investors want to know if you are attacking a lucrative market and have a good go-to-market strategy. Key questions:
- How big is the market?
- Is the market growing?
- Are you solving a major pain in the market?
- Is your go-to-market strategy reasonable?
- Funding Risk: Investors need to believe you can execute your plan with the amount you are raising. Key questions:
- Is this too much or too little of a raise?
- Is your use of funds strategy realistic?
- How long is your runway?
- Will you have to raise another round in the near future?
Before you hit the fund raising trail, ask your self these (and other) tough questions. If you don’t have good answers, find things you can do to mitigate concerns investors will have. Anything you can do to reduce these risks will increase your chances of successfully raising capital.
This is a call to all who plan on applying for CapVenture. Submit your application by this Fri 6/19. There's a $50 discount to those who are accepted to the program. Final application deadline is Weds 7/15.
As a reminder, ATDC, along with our partner TAG, are accepting applications for the 2009 CapVenture Program.
CapVenture
is a unique program that educates and equips CEOs and executives of
early-stage companies for smarter and more productive capitalization of
their businesses. Now in its 3rd year, CapVenture has been incredibly
successful; past
participants include Centrafuse, Global Crypto Systems, Purewire, and
Solo-Health.
Technology companies that are selected for this year's CapVenture will be guided
through extensive workshops on fund raising preparation, an elevator
pitch exercise and review, executive summary review, investor
communications and practice investor pitches. Participants will also
receive weekly mentoring from Atlanta investors and entrepreneurs.
CapVenture’s series of presentations and workshops prepare executives
for the opportunity to meet angel and venture investors and culminates
with an Investor Forum and Celebration. After the final event, the
top-rated CapVenture companies will also have an opportunity to present
at the 2nd annual Venture Atlanta conference in October.
