Posted April 27th, 2009 by admin
I came across this on Guy Kawasaki’s blog, which is another great free resource – http://blog.guykawasaki.com.
It’s a free utility that wizards you through a bunch, and I mean a bunch of questions, then just when you’re about to give up on it, it spits out a free custom Term Sheet for you, in Microsoft Word or other formats.
If you’re not familiar with Term Sheets, and by extension, venture financing, it’s a great tutorial. If you are savvy to them, you’ll appreciate just how robust this free service is.
Go to www.wsgr.com and you’ll see it on the home page.
Pretty cool.
Posted April 16th, 2009 by admin
Getting investment in your start-up may be absolutely necessary to grow your business. But unless you’re getting “dumb” money from family and friends who won’t ask too many questions, going for investment too early can prove disastrous. Here’s why.
You never want to get investment to pay daily operating expenses, because that means you’re in bad financial shape, and perhaps your business just isn’t that solid. Hey – if you can’t be more critical and honest about your company than anyone else, you’re already in trouble. Furthermore, any kind of sophisticated investor will be able to immediately sniff our your precarious situation, and either because of the large amount of risk, and/or because they know they have you in a tough place, they’ll squeeze you for really tough terms.
If you then start doing much better, you’ll regret the terms at which you made the investment.
Finally, most investors won’t consider investing in a company in tough shape to begin with, so more likely than not, even if you’re willing to accept one-sided terms, you probably still won’t even be able to get them.
If at all possible, boot-strap yourself to the point where you prove your business model. This includes, but is not limited to your ability to:
Product Companies
-Reliably source your units with acceptable quality and in acceptable time frames
-Warehouse if needed, and ship as desired by your clients
-Make sufficient margin on the unit sales to not only cover your cost of goods but to defray adequate general overhead as well
-Demonstrate that you can obtain enough additional customers at a similar cost to make the business viable
Service Companies
-Reliably obtain and train the necessary number of people needed to provide your service to the first batches of clients
-Make sufficient margin on the unit sales to not only cover your cost of sales but to defray adequate general overhead as well
-Demonstrate that you can obtain enough additional customers at a similar cost to make the business viable
Once you have proven that your business can work, investment, and debt become appropriate and viable methods of financing. Now you’re not asking the world to help prove that you were right, because the world will invariably charge dearly for that. That’s your job, you’re the one who said you could do it. Get investment after you’ve shown that you’re on to something – investors will be happy to give you money to grow, or scale your business, and will also give you terms that you won’t laugh / cry at.
So eat that risk, and then you’ll reap a far greater reward.
Posted April 6th, 2009 by admin
William Goldman, the famous Hollywood screenwriter, got so tired of people coming up to him and telling him they had a great idea for a movie. When a doctor at a party said “I have a wonderful movie idea. Someone just has to write it,” he replied “That’s funny, I have a great idea for a surgery, someone just has to do the cutting.”
Ideas aren’t worth much.
Yes, that’s right, ideas are worth next to nothing. I know, it seems crazy – as ideas are what innovation is all about.
Sort of. Everything starts with an idea, but unless you put the idea into practice, it’s just an idea. And ideas by themselves don’t go anywhere. Think about how many times you’ve had a great idea, did nothing about it, then saw later that someone else had done it.
Almost every company has changed and adapted from its original idea. The world is about change. It’s great if your company starts off with a killer idea. But unless you have a good management, or unless you’re incredibly lucky, the business will fail, plain and simple. Business isn’t a one time shot, it’s daily execution.
So don’t wait to start your business until you have the best business idea of all time, because you’ll be waiting a long time. A bad team will drive a good idea into the ground. Start with a good idea, and get the best team you can. Strong management will adapt an ok or a bad idea over time, and make it work. They’ll commit to making the business work, not the idea. They’ll adapt as necessary. The real value isn’t in what you provide as a business, it’s the customer problems you solve. Customer problems have a funny way of changing too.
A partner of mine once described a strong idea as “basic with a twist.” That’s about right – don’t be too far ahead of the world, like FedEx was with Zap Mail in the 1980s. Do something that other companies already do, just do it a little better. Don’t focus on what you do, but how you do it.
Now that’s a good idea.
Posted March 9th, 2009 by admin
I’m a big believer in the open movement. It’s both inevitable and beneficial.
Open Source EZ Numbers? I’m working on it.
Meanwhile, the paper I wrote on how Open Science, juiced up with Prizes, can serve as a valuable addition to patents for innovation in medical research (and beyond) has now been published by Rejuvenation Research.
There are a lot of people advocating that we scrap medical research patents, but as I argue, that’s both impossible and ill-advised. Yes, big pharma has backed themselves into a “blockbuster” revenue model corner, and price their drugs beyond the means of millions of people who need them, but they are a powerful innovative force nonetheless and we don’t want to disenfranchise pharmaceutical companies altogether.
The beauty of the open movement in regards to patents is that you don’t even need to disallow patents. All you need to do is disclose information, and then patents will, to the extent that justice isn’t subverted, either not be issued or revoked.
Just as in academia, it’s the same with intellectual property in patents – the more information is disseminated, the more valuable it is. If you publish techniques on, for example, how to use turmeric as a wound healing agent, nobody can then patent it, and you’ll protect such indigenous knowledge from exploitation. (Now without some twists and turns, as I detail about turmeric.)
Here’s the abstract:
The largest industry in America is increasingly incapable of serving its customers. Over-fencing of the information commons has led to unaffordable medicine, for want of which millions of Americans and people around the world go without lifesaving treatments. Eliminating patent distribution exclusivity altogether, however, is not feasible, given the entrenched nature of the health-care industry. This paper proposes a program of voluntary Open Science Prizes that would draw large numbers of new players, who would in turn produce much new medical innovation, provide academic priority recognition, and develop a growing body of patent-beating prior art that would serve as public domain firewalls on a new supranational Hyper-Commons.
If you’re interested, you can download the paper here: www.hypercommons.org.
Posted February 27th, 2009 by admin
Sometimes a downturn /crisis /depression /recession /deflation /stagnation /stagflation /panic can be the best time to start a new company.
Yes, bank credit is tight, but companies of all kinds are giving discounts on their products and services. Employees are easier to come by. Have you posted a job opening lately? You better have a big inbox.
Here are five companies that started during tough times:
Procter & Gamble – Panic of 1837
IBM – Long Depression of 1873-1896
GE – Panic of 1873
GM – Panic of 1907
FedEx – Oil Crisis of 1973
Read more: http://tinyurl.com/d3qwbf
Posted February 27th, 2009 by admin
This is a good post on CNN Money on alternative places to get money – alternative meaning not banks.
Virgin Money (used to be Circle Lending) is a cool idea – it helps structure deals you do with friends and family. That’s where most early stage money comes from anyway, and I know too many families and friendships that suffered when investments went sour and there weren’t structured deals.
http://tinyurl.com/4uzeon
Posted February 26th, 2009 by admin
As attributed to George W. Bush. Did he misunderestimate as well?
Check out this article in Newsweek. Having lived and worked in France, I’ve always said it’s not a place to work, but a place to get laid off, and retire. But now the government has just dramatically reduced the financial requirements on starting a new business. They estimated 200,000 new ventures by the end of 2009, but as of mid-February, there were already 62,000.
This is a sea change.
http://bit.ly/xrtTH
Posted February 25th, 2009 by admin
I just finished scoring the my five entries in this year’s PennVention contest. (http://tinyurl.com/abud5n)
PennVention is a really cool competition put on by the Weiss Tech House at the University of Pennsylvania, and over the years I’ve found the teams to be savvy both from a tech and business point of view.
My entries this time around were a new way to detect a lethal disease, an online manufacturing hub, a new kind of open multimedia venture, unique tableware, and revolutionary new solar technology.
They can always use mentors and judges, so if you’re so inclined, drop them a line.
Posted February 24th, 2009 by admin
The SBA announced it’s making $255 million available in interest-free emergency loans to small businesses.
I expect we’ll see more of this sort of thing.
These loans only apply if you already have bank-issued business loans, but the cool thing is that for the first time, the SBA will guarantee the loans, making them risk-free for the banks.
The SBA has but 15 days to work out the details.
http://tinyurl.com/atvrzp
Posted January 15th, 2009 by admin
It’s not ready for prime time on the site yet, but I wanted to mention it here for the time being.
I’ve been working on a version of EZ Numbers that’s not in Excel, and have a pretty cool option for it. I’ve got a rough pass up now, and you’re free to use it if you like. You’ll need to figure out some of the conventions (click, double click, that sort of thing) but it’s a pretty straightforward layout that you shouldn’t have many problems with.
Enter your information on the left – see the results on the right. It’s not as robust as EZ, but there’s enough for you to test out a new business idea in a few minutes.
It’s a much more condensed version of EZ Numbers, so don’t fret if you haven’t downloaded the real EZ yet, but it’s the same basic philosophy. In terms of simplicity, it’s about halfway towards the iPhone version.
You can see it here:
www.hoodoggies.com
p.s. Let me know what you think, happy to get any feedback.
