Archive | Start-ups

Time to Go Swimming

By • March 15, 2013 • Angel Investing, MissionKonnect, Start-ups • Leave a comment

Jump into swimming pool

I recently decided that although investing in start-ups and lecturing on “pitching to investors” is really freaking cool – it’s time to jump back into the game. Being an Angel Investor is kinda like being a lifeguard at the pool, you’re always around the pool, but you never really get to jump in and just have fun swimming.

Me and my co-founder, Rick, just launched MissionKonnect.com. We are re-purposing some really robust automated marketing software for non-profits, charities and mission groups. Our relationship management solutions create lasting, powerful relationships with volunteers and donors. Our software delivers insight into prospect and volunteer engagement, automates marketing campaigns and graphically shows the progress of every individual’s and organization’s relationship within the  nonprofit organization – it’s pretty much a “marketing as a service” company at the moment, but ultimately we’ll build the company around the technology.

The cool thing is that we are only in our “beta phase” and just started testing our assumptions, and we already have additional clients that want to implement our technology and services right away. I’m sure we’ll gain more knowledge as we move through the process with our beta customer, but it’s nice to know that we’re already building a pipeline of potential clients. I guarantee, we will have several paying customers before we even finish testing our beta (I guess, I had better get that checking account set up). I plan to share my experiences and lessons learned right here on my blog.

Lesson #1 Tell others what your doing -use your personal network:

Words are powerful and change your reality.  I’ve known for several months that I wanted to jump back into the start-up scene – I knew the problem that I wanted to solve, the process it would take to get there, but was missing a clear vision for the SOLUTION.  So, I made up a list of things that “I knew for sure” about the problem and space we wanted to go after, and without a clear vision, I just started sharing my story with people, and one conversation led to another and one meeting led to another meeting and finally one introduction led to another introduction.

I was amazed at how many people in my network said, “I’m not sure I can help, but you should talk to this person and just gave me an email introduction”. I started taking lots of meetings and gathering all the information I could. Plus, it gave me a chance to keep dialing in my pitch and talking through different possible solutions.

Lesson #2 Find a co-founder with the same level of passion for solving the problem:

I was fortunate that one of those early conversations led to an email introduction that later led to me finding a co-founder that was just as passionate about the problem as I was. I had completed my list, formulated some new ideas and even completed the first version of  my Business Model Canvas, when I was introduced to Rick. Rick and I hit it off right away and I knew after the first meeting that I had found my co-founder for this new mission. Being an investor, I know how important the “team” is to the overall success of the company, and I know if the team is passionate about the problem – we’ll eventually discover the right solution.

4 Early Mistakes You Must Avoid When Starting a Company

By • September 11, 2012 • Entrepreneurs, Start-ups • Leave a comment

Making mistakes is easy –we’ve all done it.  But for young entrepreneurs - the mistakes made early in your start-up will have a drastic effect on the future of your start-up. The choices you make now will determine your future success and the profitability of your company. Avoiding these four simple mistakes will assure you greater success and a chance at profitability.

1. Lack of True Vision

Many people go into business without a vision, but it winds up costing them lots of wasted time and money in the long run. Start your company from day one with a vision. Your vision should be the “ideal end result” –the company of your future. Where do you want your company to be in three to five years?  How many hours are you willing to put in?  What kind of culture do you want to have?  What must you accomplish to get there?  A clear vision of your future gives you greater direction, and with greater direction you’ll reach your destination much faster.

2. Failing to Understand the Business Side of a Start-up

As a young entrepreneur, you must educate yourself and learn to operate your company like a business from day one. Gain an understanding of things like cash flow, overhead, personnel management, ROI,  marketing and customer service. If you really want to be successful, you should dedicate time for working on your company, not just working in your company. Set aside time every week to work on your business, making it a real business.

3. Focusing on the Product, not Relationships

It’s not all about your product, it’s mostly about relationships. Young entrepreneurs are sometimes so focused on building their product that they forget about forming a true, trusting relationship with every employee, customer and investor. Your company will be more successful if you focus on your relationships as much as you focus on the product.

4. Failing to Set Goals and Monitoring the Results

Goals and Milestones represent the incremental steps to the company of your dreams. Goals give you direction and a target to aim for. Setting and achieving both personal and professional goals is one of the best ways to measure the progress of your life and your company. Include your team in your goal setting and share the rewards and wins with them when you reach a milestone. Always monitor your results because numbers don’t lie.

Avoiding these common mistakes and pitfalls will not only make you a better leader, but will also help your start-up become the successful company it can be.

Financial Models Do Suck, But We All Still Need Them

By • July 16, 2012 • Pitching Investors, Start-ups • Leave a comment

As a venture capitalist and angel investor I see lots of financial models for various startups at different stages in the process. Most entrepreneurs are really excited to share with you their vision of a young company and explain the problems in the World they have set out to solve, but when you start asking about their financial models and projections the whole conversation changes and the energy is sucked right out of the room.

Financial Models Are Mostly Wrong

I’ll be the first to admit, most financial models are useless for a startup and as an investor I know many, if not all, are going to be wrong anyway. Why will they be wrong? Because financial models are really only fancy mathematical equations with various inputs and one or two wrong assumptions on the input side screws up all the numbers on the output side of the equation.

Financial Models Do Serve A Purpose

Then why do we still like to see financial models? Because the real value of doing financial models lies in the PROCESS, not the actual models themselves. As Investors we want to know that entrepreneurs have thought through the process and have a basic understanding of what it’s going to take to build the product, acquire customers, operate the business and at what point the company will breakeven. It doesn’t matter how cool your product is, if you can’t find enough customers and can’t generate revenue you’re probably going to fail. At some point it has to be about the financial models.

Make It Easy On Yourself

Don’t try to overdo your projections, use basic assumptions and build a “minimal viable product” or “minimal viable financial model” that can be easily adapted and changed as your knowledge increases about the inputs and expenses involved with running a company. Do you need five year projections from day one? Heck no, but you do need to have an idea of how much money you have to work with, what it’s going to cost to operate your business on a monthly basis and how many customers you will eventually need to offset those cost to reach breakeven.

Attitude = Reflection

By • July 1, 2012 • Dentistry, Start-ups • Leave a comment

I once heard this story about a traveler who was moving his family to a different town and passed a farmer coming from the opposite direction he was going.

“What kind of people live in that town?” asked the traveler.

The farmer answered with a question, “What kind of people lived in the town you came from?”

The traveler responded that they were obnoxious, self-centered and selfish and that was the main reason he was leaving.

The farmer said, “The people in this town act the same way.”

A few miles later down the road another traveler bumps into the same farmer, and asked a similar question about the people in the town. The farmer responded the same way by asking about the travelers experience in the previous town.

The traveler said, “Oh, they were very polite, friendly and accommodating.”

The farmer said, “So are the people from this town.”

Like the traveler, it’s our attitude towards life that determines life’s attitude towards us.  A person’s attitudes and expectations tell the world what they want out of life, and people often get what they want or are expecting. Your attitude shapes your beliefs, your beliefs govern your actions, and your actions determine your results. When you offer a sincere smile to a stranger, it’s almost impossible for him or her not to smile back at you. When you’re in the mood to start an argument, it’s relatively easy. Say a few negative things and you’ll probably get a negative response from the other person.

People usually reflect back to themselves their own reality. This is why it’s important as the leader of your company to always maintain a positive attitude. It’s your attitude towards life, your team, and your customers that will determine their attitude towards you. Remember, your attitude is like a reflection – a reflection in the mirror.

 

My Favorite Facebook Quote/Cartoon

By • June 27, 2012 • Humor, Start-ups • Leave a comment

This is so true.

 

K.I.S.S.

By • May 23, 2012 • Pitching Investors, Start-ups • Leave a comment

Keep it Simple Stupid. I can’t remember how long ago it was that I first heard this acronym, but it’s something I believe should be at the core of any business model or Investor Pitch. In the early years of the web – people tolerated flash intros, lots of different fonts and cheesy cartoons and even dealt with clunky websites and software products that were difficult to navigate, but that has all changed – people want simple, easy-to-use functionality and looks.

A cluttered website like a bunch of text in a pitch deck is distracting and confusing for both users and investors. If your product isn’t the simplest one then someone is going to build something similar, make it easier to use and steal a few (possibly many) of your customers.

Google Search seems to have started the trend and Apple has definitely raised the bar for everyone. It’s time to focus your start-up on simplicity.

So what can you do to make your product or application simplier?

1. Say no to extra features. Everyone wants to add additional things to their product and some customers will even ask for special features. Build special features for certain clients and charge them for it, but don’t include every request in your product.  Kill those features that only 10% of your customers use or at least inform those customers where the new buttons will be located and hide them on a second or third page or on a little button in the comer.

2. Look at it from the customers’ viewpoint. What happens when a customer starts your product or lands on your webpage? What’s preventing them from having the best possible experience with your product? How much of the text is really necessarily needed to get the point across? Help make it easy for you customers. Give them an Easy Button. Reduce Clicks. Eliminate Messages. Avoid Alerts that are not that important.

3. Specialize. Focus on what you do the best and outsource the rest. If you’ve got the back end covered, hire out the front end design. Spend your time on doing what you do and not “playing” in other areas.

4. Post a sign on your desk that says K.I.S.S. Constantly ask yourself how this can be done simpler? Review your technology and your application frequently. Talk to your customers.

Don’t forget simplicity moves fast. Innovation means it won’t be long until someone else comes up with a simpler way. Companies that win in the long term will be the ones that tackle bigger problems with even more simple solutions.

 

Building a Fire is like Building a Start-up

By • April 25, 2012 • Entrepreneurs, Start-ups • Leave a comment

This past weekend I had to work in the yard cutting out branches and big, thorny limbs. Rather than haul the limbs to the dump or pull them out by the trashcan, I asked my neighbor if he wanted them to us as kindling in his fire pit.

They weren’t really large branches and they couldn’t keep a fire going for a very long time, but they were the perfect size for starting the fire.

Building a startup is a lot like building a fire, and you need kindling along with a few other items.

With a fire you need a match, some paper, kindling (small sticks and twigs) and a few large logs to keep it burning. In a startup you need an idea (match), dedicated people (some paper) to ignite the MVP (kindling) and a final product (big logs) to create revenue and keeps the company growing.

Without any of the four components – you are toast!

You can’t build a fire with just big logs. You can’t start a fire without a match, and kindling won’t keep your fire going for very long.

You can’t start a company with just an idea or only an awesome product. It’s takes all the components to really get it right and build something that will last.

Just like building a fire, make sure you gather all the components you need before building your next start-up. A bunch of matches and big logs won’t do it. You’ll need the right people and an MVP too.

 

 

 

Mental Attitude

By • March 5, 2012 • Entrepreneurs, Start-ups • Leave a comment

Thomas Jefferson said, “Nothing can stop the man with the right mental attitude form achieving his goal; nothing on earth can help the man with the wrong mental attitude.”

I’m not saying that you have to wake up every morning with a big smile and talk to yourself in the mirror (although it may not hurt), but  first and foremost, you have to be in control of your attitude and your thinking.  You must become mindful of your thoughts and words that you are using everyday.

Our thoughts, words and expectations have tremendous power and influence over everything we do. Often times, all it takes to bring about a drastic change in your company (or in your life) is to just change the way you are thinking and doing.

What are you allowing your mind to dwell on today? Are you focused on problems, or on the solutions to those problems? Are you paying attention to what you can’t do, or what you can do? Are you focus on what skills your team doesn’t have or what skills they’ve already got? Are you thinking small, or are you thinking big?

The story of Roger Bannister is a perfect example of the power of changing your thinking. For hundreds of years, people thought it was impossible for a human to run a 4-minute mile.

The experts declared, “A human can’t run that fast in that length of time.”

Then a man named Roger Bannister broke the record and performed a “Miracle”.

People soon changed their thinking, and it wasn’t long until many others started breaking the 4-minute milestone. Roger Bannister changed the way people thought about the 4-minute-mile, and within ten years 336 other runners had broken the 4-minute-mile.

What happened? People changed their thinking, and they stopped listening to the experts. Roger Bannister had done it. It was no longer the impossible and many others followed.

If you want create a Successful Start-up, you must begin with the right mental attitude and the right “thinking”.

What you think determines how you feel, and the way you feel determines how you act; and the way you act determines how you motivate employees, how you relate to your customers, how you communicate with your partners, how you deal with problems at the office, and ultimately how successful your start-up will be.

 

Excitment > Hesitation = Investment $

By • February 4, 2012 • Pitching Investors, Start-ups, Venture Captial • 1 Comment

I’m not big on formulas, but here was a great quote that I read this week in an article about “desrisking buckets” by Brendan Baker. You can read the whole article here:

http://brendanbaker.tumblr.com/post/16830178199/derisking-buckets-how-to-identify-and-deal-with

“Investors fund startups when their excitement outweighs their hesitation. Hesitation comes from perceived risk. And for a startup, we can group these risks into some buckets:”

  • Team risk: can these people work together to build a huge business?
  • Technical risk: can this be built in a reasonable timeframe and with reasonable resources?
  • User risk: will people actually want to use this?
  • Revenue risk: will people actually pay for this?
  • Scale risk: will people use or pay for this in large numbers?
  • Partner risk: will any required strategic or distribution partners come on board?
  • Customer risk: will they be able to sell to important customers?
  • Funding risk: will anybody else fund this (esp seed stage, for many investors)

These are the questions I think almost every investor is asking themselves while listening to a Pitch. Make sure you address these issues when Pitching your awesome idea.

 

Learn to Pitch

By • January 10, 2012 • Pitching Investors, Start-ups • 3 Comments

It only took about nine months of deal flow and a handful of “pitches” before I realized that most entrepreneurs are really, really bad at “selling themselves” and “pitching” their ideas and companies to investors.

I cringe every time I hear about a great start-up idea or read a well-written business plan, and then watch in horror as the founder stumbles and falters throughout the “pitch”.  So many good ideas and businesses are cast aside or ignored, and fail to receive the benefits of a properly funded start-up – all because of a poor presentation during the “pitch”.

During a recent VC meeting we sat and listened to a founder present a fantastic problem, idea, and solution – the Trifecta in the investor community. This was a technology play in a niche market with a proven concept. The only thing needed was the influx of money to take this business to the next level, but after watching a “pitch” that lacked focus and direction, we spent the next 30 minutes debating about whether or not this guy could actually turn his business into a profitable company worthy of our investment dollars. Because of a poor pitch he didn’t get funded.

The sad part was that as I’m sitting there taking notes, I’m thinking to myself, if only I could have spent a few hours with this poor guy BEFORE his presentation. We could have highlighted “this or that”, deleted a whole section here, added more about “this”, not talked about “that” – the guy probably could have gotten a “YES” and ultimately our money.

Learn to Pitch before you start raising capital. Here’s four simple suggestions to improving your pitch.

Tell us what you do in as few words as possible.

Maybe it’s me, but it seems like most Angels and VCs are people with type “A” personalities. We have short attention spans and don’t like to waste time. Give us the “short version”, and if or when we ask questions, then you can provide us with more details. The first thing we want to do is understand what it is that you do – in plain and simple English. Next on the list, we want to know what problem you solve and why your solution is important to your customer.

What’s the plan? How does it scale?

As investors, we aren’t always interested in your product, but we are interested in “returns”. Your mission statement is important to me, but what is really rolling around in my head while you’re up there giving us the “pitch” is: Will this work? Is this the right guy/gal for the job? How much money will we be able to make when we sell our shares? Does this thing scale? Explain to me how you are going to market and grow the business. Most investors are in it to make a profit, and if you’re business doesn’t scale – it probably won’t be very profitable. I’m not interested.

What’s your go-to-market strategy?

Your great idea is useless if no one hears about it or knows it even exists. So many people spend time developing a great product, only to find out no one wants it. How are you going to get it into the hands of your customers? What is your Marketing plan? What is your customer acquisition cost? Do you have any sales channels besides your sales team?

Let us touch and feel your product.

A short demo or actual product sample is really key. I want to use it, at least see it. Is it simple? Does it solve your customer’s problem? Is it easy to use from a user’s point of view? We don’t need to understand all the features or really any of the code – I just want to know that it’s clean, works and is simple to use. It’s hard to invest in things that look too complicated and things we can’t fully understand.

If you nail these 4 key points in the “pitch” and can answer some basic questions about your product, financials and your competition – you’ll have a much better chance of raising funds and building your awesome company.