Up and Running Blog

startups

Screen shot 2011-07-01 at 10.43.40 AM

Joe Stump, CEO and founder of SimpleGeo, put together this slide deck on starting your startup. 99% of the presentation is key for anyone starting a business. The other 1% is for people starting a technology startup.

Choosing your technology stack is one of many decisions you’ll have to make when creating a company from scratch. Along with this, you’ll need to figure out who you should found a company with, who you should take money from, what the company culture should be, management processes, and who to hire when. Joe will be covering basic technology stack choices (cloud v. hosted, frameworks, etc.) as well as other critical decisions one faces when starting a startup.

Key Takeaways

  • Starting a company is really hard. Don’t start a company unless it’s an obsession and something you really love.
  • Choose your partner wisely.
  • Focus on the problem.
  • Focus on a single use case that addresses the problem.
  • Listen to your customers.
  • Question your initial assumptions.
  • Implementation takes time.

Check out Joe’s full slide deck from his presentation on Slideshare.

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I was happy to pick up this quick piece from Jeff Bezos last month on Business Insider. Jeff, founder of Amazon.com, ought to know. In Business Insider’s Instant MBA series, Jeff says Business Plans Are Important and Necessary. He says it’s not about being right and guessing the future correctly. It’s about guiding your business and managing better:

“You know the business plan won’t survive its first encounters with reality. It will always be different. The reality will never be the plan, but the discipline of writing the plan forces you to think through some of the issues and to get sort of mentally comfortable in the space. Then you start to understand, if you push on this knob this will move over here and so on. So, that’s the first step.”

So my conclusion, from Jeff’s advice, is that developing a plan is good for your business, but sticking to that plan, not so much. Develop the plan, start moving, review and revise often. Keep it flexible.

It’s a plan, not a document.

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I dealt with some disturbing stuff on this blog yesterday. Before I explain, here’s what I wrote in Women-Run Tech Startup Successes, on this blog, in January:

I believe there are disproportionately few women heading interesting tech startups; that this is bad; and that it’s neither their fault nor their preference. If you disagree, that’s your right, but I’m not arguing about it here. I’m saying it’s obvious and moving on.

This is what I wrote last year in 5 Points on the Gender Gap in Entrepreneurship on Planning Startups Stories:

At the very least, the men in the crowd can recognize that it’s there, think about it, and make sure that we’re not contributing to the problem. Where we can, like in our local angel investment group, we can seek out successful women who qualify to be accredited investors and invite them, maybe even urge them, to join. We can at least know that those women we meet in startups along the way have overcome a lot of mindless stereotypes, and are still fighting them. We can wake up and at least recognize the imbalance. Then maybe we can fight it one situation at a time.

What happened? I’m not going to link here to the post in question. I don’t want to give it more play or more traffic. It was a stupid reference to bra straps in a tasteless and inappropriate way. It added nothing useful to the content of the post. I didn’t write it, I’d never read it, and I never approved it. It got here last weekend as one of several hundred posts brought here in a blog transition. I did approve having the flock of about 800 posts brought over here, but I had no idea that anything like this one was there.

It hit me like a kick in the stomach. Even though its author was clearly identified as somebody else, not me, this blog has been exclusively me for three years and it hurt like hell to see it there. People in Twitter blamed it on me.  I agreed with several angry comments posted  below it. I was going to just delete the whole post, or, at the very least, delete the offending sentences; but we’re a team here, and people I respect say it should stay there as an example. Trying to make it disappear would leave only the ugly residue. The tweets and the links and the comments. So we’ve left it there, along with the comments it inspired.

Which is why I quoted myself here from earlier posts. It’s one thing to distance myself after the fact; it’s quite another – and a hell of a lot better – to show what I’ve been saying all along, well before yesterday’s blowup.

I sincerely hate the sexual gender-specific references that men way too often play down as harmless, as if women were being too sensitive. Even the least offensive of them are demeaning, and the way we – men – quickly imply that it’s all good fun and nothing to make a fuss about makes it worse. The borderline offenses, supposedly harmless must be (I have to guess; I’m a man) like a low-grade fever or a stone in the shoe, a supposedly small, constant annoyance that ends up as a huge issue.

This stuff is always bad. Of course it rarely happens to men, but when it does, we don’t like it either. Read this post by Jolie O’Dell about how distasteful it is when it’s about a man. Still, women get it about a million to one, so I want to add another quote from the Gender Gap post I wrote about a year ago.

Sad but true: none of us men really know how hard it is. We look around and we see lots of women working side by side; things are certainly a lot better than they used to be. But let’s not kid ourselves.

For example, men don’t have to deal with some significant percentage of the population — wrong, of course, but still — assuming we’re bad fathers if we work hard; or that we should be at home taking care of the children; or that the house/home work is ours, because of our gender, regardless of the rest of what we do.

We don’t get up to the podium in a business plan contest as a woman looking out on a sea of male faces in the audience . We don’t stand up in a venture capital conference room or angel investment group as a woman looking out at 90% male faces.

Less than a month ago I was visiting with my sister. We were talking about this problem in reference to our daughters (I have four, she has two).  She told me she was in a meeting once where a man referred to getting her to agree to something in a business meeting as “getting one button unbuttoned.” This happened to her 20 years ago, and she still remembers it in vivid detail today. Why does she have to carry that memory around? There’s no excuse for it. Things like that, and the bra strap reference I’m dealing with now, matter. They have to stop.

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I was asked this question in a comment under an earlier post:

I am starting a very small company and I am the only employee, and want to keep it that way until I know when and how to take my next step. Could you recommend where to start?

I didn’t publish the comment because it didn’t fit the post, but it’s a question I get a lot, so I’m posting an answer here instead:

  1. Sorry, everybody hates getting this reminder, but: starting a business isn’t a one-size-fits-all project. I’ll try to help, but recognize that there are many different recipes around. Look at this entrepreneur.com website, sba.gov, or bplans.com, for example: the problem is too much information, making it hard to choose which set of steps to follow.
  2. Make sure you’ve got the heart of a plan: that’s not a document, at least not if you don’t want it to be. It’s thinking: understanding who you are and how you’re different, what you’re selling, who wants it, how much they expect to pay, and what special focus makes you different and better. You don’t have to write it up. Maybe you put it on your computer, as simple bullet points. Talk to people you know and trust who might give useful advice and feedback. Is it just an idea, or is it a real business opportunity? The difference, in a nutshell, is that a real opportunity means it will make enough money to sustain itself. It means people want to buy what you’re selling. Is there a real business opportunity? Or is it just an idea?
  3. The details depend on your specifics, which is why you want to sketch out the flesh and bones of a plan. This is plan-as-you-go style, so plan the obvious parts quickly and then refine as you go. The core of a plan is the assumptions, specific tasks with dates and deadlines and budgets, sales forecast, expense budget, and cash flow.  That’s going to cover essentials like naming, legal establishment, local requirements, starting costs, tasks like the website and outfitting the office, and so on. It’s hard to generalize here, because so much depends on your business specifics.
  4. Plan, but don’t sweat the plan as document. Keep it on your computer if you don’t have to show it to anybody else. Keep it simple and practical. And don’t worry about getting all the details down and locked in; things are going to change, so keep it fluid and flexible.  The plan is valuable because it makes adjustments easier, and serves as a point of reference, not because it isn’t supposed to change.

And then get going.

(Image: istockphoto.com)

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I don’t get it. I believe it, but I still don’t get it. John Tozzi posted “Startup Activity at Record Low” today on his New Entrepreneur blog on BusinessWeek, quoting outplacement firm Challenger, Gray & Christmas. Here’s his summary:

Challenger says just 3.7 percent of job seekers leaving its outplacement program are going into business for themselves in the first half of 2010, compared to an average of 8.6 percent in the full-year 2009.

I found this note particularly fascinating. John quotes Challenger:

Startup activity tends to drop at the beginning of a recession, spike at the end when unemployment is highest, and drop when hiring resumes.

This shows up clearly in this fascinating chart, startup rate vs. unemployment. What bothers me about it, however, is that I thought I remembered the great recession of 2008-2009 fairly clearly, and I don’t remember a big spike in startups as shown here. I remember a credit crunch, a drop in SBA loans and a drop in startups.

But I don’t mean to imply that I don’t believe the data here. I do. I guess what happens is we all react to these trends at different points in the cycle. We get behind sometimes. We see the startup rate shoot up as the unemployment rate shot up; and then it goes down.

What does make sense here is the phrase “pushed entrepreneurs,” as in pushed off a cliff. People who go out on their own because they have to. We heard a lot about pushed entrepreneurs as the green line above shot up in 2009. And some of them make it and stay in business, and some don’t. And the turn back downward in startups isn’t (presumably) those same people making it or not making it; it’s fewer startups happening because more people find jobs.

How does this affect you and your startup? It doesn’t. Macroeconomics doesn’t drive startups. You do. You’ll start your business, or not, because it’s right for you. You have plans, customers, resources and the will to do it. Or not.

It reminds me of this quote I picked up from Fred Wilson, on his blog, which actually originated in Twitter:

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Is your company in Oregon? Is it a startup or early-stage company looking for angel investment? Does it have the kind of team and growth prospects that can make money for investors?

If you answered yes to those three questions, please go to the Willamette Angel Conference (WAC) website and submit your company for WAC 2010, to be held in Eugene, Ore., in May.

Yes, it will cost your company $199 to submit a plan. (For the record, that money goes to affray the costs of the event; not a penny of it goes to the investors.) But how can it not be worth that to get your company in front of legitimate investors?

At the end of the May 13 event, the angel investor group will have chosen a company for an investment of more than $100,000.

Even if you don’t win, what’s it worth to get feedback from people who are ready to invest real money in real companies? These people will be reading your summaries, watching your online videos and, if you get to the semifinals (12 to 15 companies will), they’ll be reading your business plan, listening to you deliver your pitch, asking questions, making comments and giving your feedback.

Willamette Angel Conference

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Here’s a question I got yesterday in e-mail:

I’m 25. I have a good degree, I did OK with my own online business, and then I did really well in a dealership, brick and mortar, selling major brands. But I want to go back and start my own thing again, only slightly different than where I’ve been working. Is this entrepreneurial? Is it worth opening “another” dealership only because you believe you are better at marketing and offering SLIGHTLY different product delivery? Should new ventures be saved for only the unique and revolutionary?

imageI love this question, because I get it so often, and it’s based on one of the biggest misunderstandings there is in small business. You don’t have to be first to be a success. You don’t have to be unique. You don’t have to be revolutionary.

What you do have to do, however, is give people value. Give them a reason to buy from you instead of from somebody else. You have to show up, open the doors, answer the phone calls, solve the problems and do whatever marketing you need so that people know it. How’s that for unique and revolutionary?

Think about this one: How many graphic artists are there? Or restaurants, shoe stores, bookstores, doctors, lawyers, butchers, bakers and so on. And yet people still keep starting new ones, and succeeding. People keep changing from old ones to new ones.

(Image: Kelly Talele/istockphoto)


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We all forget too easily: The best startup funding is sales. Sure, we all think of angel investment, friends and family, and SBA loans; all of those options are necessary for most startups. But sales is better.

If you can, find the early customers. Give them a deal, make them important, work with them to optimize their needs; but make a sale.

Even if you do need to go out and find investment–and I speak now as an actual angel investor–there’s almost nothing as convincing as actual sales. People are spending money on your product or service. It makes a new business proposal far more credible.

True, not all businesses can do that. But a lot of them can. And, as we write about business plans and seeking investment and all, we forget the real sweet spot: financing growth by making the sales.

(Note: this is a repost from Planning Startups Stories, where I posted it a few days ago. I can’t remember the last time I reposted from that blog to this one – it has been a while – but I decided to do that today because it seems to be very appropriate here too. It’s been on Twitter a lot already, from the first time I posted it.  Tim. )

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“Unconsciously, everyone expects a startup to be like a job,” says Paul Graham, programming language designer, author, and venture firm partner. “It explains why people [in startups] are surprised…and why the surprises are so extreme.”

Graham’s recent post, What Startups Are Really Like, talks about the surprises in startups. He sent an email to all the business founders who had been funded by his venture firm Y Combinator, asking what things had surprised them in their startup.

Over 100 responded and their lists were summarized into frequently recurring patterns, including:

2. Startups take over your life — “I didn’t realize I would spend almost every waking moment either working or thinking about our startup.”
4. It can be fun — “The best way to put it might be that starting a startup is fun the way a survivalist training course would be fun…”
6. Think long-term — “For the vast majority of startups that become successful, it’s going to be a really long journey, at least 3 years and probably 5+.”
12. It’s hard to get users — “I had no idea how much time and effort needed to go into attaining users. ”
13. Expect the worst with deals — “Deals fall through. That’s a constant of the startup world.”
19. Things change as you grow — “Your job description … is completely rewritten every 6-12 months.”

Says Graham, “These are supposed to be the surprises, the things I didn’t tell people. What do they all have in common? They’re all things I do tell people.

The answer to the puzzle is that our prior experience in business is our jobs — working for someone else. Being a founder of a startup is orders of magnitude beyond our experience and ability to imagine. Despite our preparation, we can’t believe it is as intense as others tell us, hence we are surprised.

So, go to Paul Graham’s site and read this essay, What Startups Are Really Like, and think about what surprised these other founders. Print it out, and stick it up near your desk where you can re-read it often. Take the advice to heart.

My thanks to my co-editor Sara Prentice Manela for sending this essay my way.

Steve Lange
Palo Alto Software

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legalsummerlogo

During his second year of law school, Philip Amoa began the process of searching for internships. He found the research stressful — he had to locate law firms in specific geographic markets, personalize application documents, and meet important application deadlines, all while trying to prepare for classes the next day. A joking suggestion from a friend to hire a personal assistant planted the seed in his mind to create some way to make the process easier, and a short time later, Amoa launched LegalSummer.com.

LSLogoLegal Summer combines the use of proprietary technology and an extensive database of law firms to provide the services of a personal assistant to law students who are looking to further their careers, but who have limited time to devote to the search. It helps law students identify possible job/internship opportunities based on location, and gives students the ability to email their customized cover letters and resumes with a single mouse click.

When opportunity knocks

Amoa considers himself a “situational entrepreneur,” and says, “When I started law school and began applying for internships, I realized the process was time-consuming and that was the point I started to think of ways to make the process easier. Time and chance happen to us all, and once the opportunity came knocking to start my own business, I had to seize the day by following my passion.”

He admits that starting a business while attending classes at the University of Illinois College of Law was not easy. But, he says “I was able to overcome the challenge with the help of Business Plan Pro. I had this ‘aha!’ moment and I wanted to bring my idea to reality. Business Plan Pro definitely helped me organize my thoughts into a well-written plan which continues to serve me to this day.”

The business got off the ground without a business plan in place, but it wasn’t long before he saw the need for one. “I decided to just plan as I went along but soon realized that a business plan was essential to the success of my business,” said Amoa. “I had a lot of ideas and was full of passion, and the plan actually helped me to keep a steady pace instead of the ‘trying to see what works’ approach.”

Fortunately he was no stranger to business plans. As an undergraduate Business Administration major, Philip had learned all about the plan-writing process. “But the main difference in using Business Plan Pro was that Business Plan Pro had some really helpful formats and tools. The software prompted me to consider things I hadn’t thought about. It was also easy to arrange my ideas in a coherent fashion.”

Extending its reach

LegalSummer.com is continuing to grow. Currently they have started expanding to law schools across the country, giving law students “a fast, effective means of researching and applying for internships/jobs. We have an application tool that saves them a lot of time and we will try to reach as many students as possible.”

logoBIG

For Amoa, who worked for a large corporation prior to starting law school and then becoming an entrepreneur, there is a great deal of satisfaction that comes with owning his own business. “The most exciting part about being an entrepreneur is taking an intangible idea or thought and nurturing it until it becomes a reality. I enjoy the art of putting together a team of skilled people and convincing them that they can bring this intangible idea to life.”

When he graduates from law school later this year, Amoa will have quite a choice of careers to pursue. And future lawyers will have him to thank for making their career stepping stones a little easier to navigate.

During his second year of law school, Philip Amoa began the process of searching for internships. He found the research stressful — he had to locate law firms in specific geographic markets, personalize application documents, and meet important application deadlines, all while trying to prepare for classes the next day. A joking suggestion from a friend to hire a personal assistant planted the seed in his mind to create some way to make the process easier, and a short time later, Amoa launched LegalSummer.com.

Legal Summer combines the use of proprietary technology and an extensive database of law firms to provide the services of a personal assistant to law students who are looking to further their careers, but who have limited time to devote to the search. It helps law students identify possible job/internship opportunities based on location, and gives students the ability to email their customized cover letters and resumes with a single mouse click.

Amoa considers himself a “situational entrepreneur,” and says, “When I started law school and began applying for internships, I realized the process was time-consuming and that was the point I started to think of ways to make the process easier. Time and chance happen to us all, and once the opportunity came knocking to start my own business, I had to seize the day by following my passion.”

He admits that starting a business while attending classes at the University of Illinois College of Law was not easy. But, he says “I was able to overcome the challenge with the help of Business Plan Pro. I had this ‘aha!’ moment and I wanted to bring my idea to reality. Business Plan Pro definitely helped me organize my thoughts into a well-written plan which continues to serve me to this day.”

The business got off the ground without a business plan in place, but it wasn’t long before he saw the need for one. “I decided to just plan as I went along but soon realized that a business plan was essential to the success of my business,” saidAmoa. “I had a lot of ideas and was full of passion, and the plan actually helped me to keep a steady pace instead of the ‘trying to see what works’ approach.”

Fortunately he was no stranger to business plans. As an undergraduate Business Administration major, Philip had learned all about the plan-writing process. “But the main difference in using Business Plan Pro was that Business Plan Pro had some really helpful formats and tools. The software prompted me to consider things I hadn’t thought about. It was also easy to arrange my ideas in a coherent fashion.”

Legal Summer.com is continuing to grow. Currently they have started expanding to law schools across the country, giving law students “a fast, effective means of researching and applying for internships/jobs. We have an application tool that saves them a lot of time and we will try to reach as many students as possible.”

For Amoa, who worked for a large corporation prior to starting law school and then becoming an entrepreneur, there is a great deal of satisfaction that comes with owning his own business. “The most exciting part about being an entrepreneur is taking an intangible idea or thought and nurturing it until it becomes a reality. I enjoy the art of putting together a team of skilled people and convincing them that they can bring this intangible idea to life.”

When he graduates from law school later this year, Amoa will have quite a choice of careers to pursue. And future lawyers will have him to thank for making their career stepping stones a little easier to navigate.

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