My Advice to Aspiring Entrepreneurs? Build Something!

I’ve been connected or introduced to a handful of aspiring entrepreneurs recently, folks that have lots of work experience, but no experience starting a company from scratch.  And the first question is always the same, “I don’t know how to get started”.

Ten years ago my advice might have been different, likely starting with the creation of a well thought out business plan that you use to raise money around based on the concept and research alone.  But today the costs of starting a business continue to plummet, particularly the costs to actually build a Minimum Viable Product or at least a prototype.  Simplified programming languages, open source code and dramatically reduced cloud-based hosting, processing and storage costs through services like Amazon EC2 and S3 have not only reduced the costs to build, but more important have enabled thousands of entrepreneurs to start businesses without the need for an outside cash infusion.    And there is no better way to share your vision and get others excited about your idea than to physically demonstrate it with a powerful product experience.  Gone are the days of million dollar investments required to get a demonstrable product, complete with features and functionality.

So the answer to the question is simple – Build something that you can use to:

  • Get others to actually use and thus prove value and traction,
  • Share with investors to get them excited about your product vision, and
  • Reduce the “cost of money” if and when you actually do raise capital

But what if you as the entrepreneur don’t have the skills to code a prototype or build a product yourself?  Easy, get immediately integrated into your local tech community events or get networked and find a technical co-founder.  Notice I didn’t say go find a engineer and convince them to build you something on the cheap or even free in exchange for “some shares”.  Rather, do your homework on the market opportunity, tell a compelling story and share your vision in a way that gets them excited and committed, even if part-time, to the success of the product which will inevitably require lots of iterations to get “right”.  Why should they be a co-founder?  Because engineers are the world’s scarce startup resource and, in my opinion, often the most underestimated from a strategic standpoint given the importance of technology in company building.

It’s really a subject of a future post and I digress, just go get a technical co-founder and thank me later.

Early Stage Priority Confusion

During the early stages in a stressful, lonely place I call StartupLand, it can be overwhelming determining where to focus scarce resources, both people and money.  There’s endless product issues to address – customer features, performance, reliability, scalability – and if you have a Minimum Viable Product and a bit of luck there are existing customers to support and retain.  Add to the mix the need to both acquire more customers and add other strategic partners to complement your product.  Don’t forget recruiting, if you are funded and enjoy the ability to grow your team, sourcing and interviewing talent can literally take up 30-50% of everyone on the team in the early days.  Oh, and your Board and investors will require some care and feeding through reporting and monthly or quarterly meetings.  That’s a lot to juggle if you have a small team (5-15) trying to tackle each of these priorities.

So how and where do you focus scarce resources?

By being ruthless about both prioritizing and sequencing those priorities where maximum traction can be proven in the shortest period of time.  And by traction I mean proving that customers will buy your product at a price that has a path to sustainability.  In my experience, it means allocating resources in 2 primary areas in the early days:

  1. Harden the Minimum Viable Product.  Specifically, ensure the product 1) has only the most basic feature set, defined as the minimum set a customer is willing to pay for, and 2) is minimally performant, reliable and scalable meaning just sufficient in all 3 categories to retain customers and enable a six-month window of customer growth.  Probably the single biggest pitfall to avoid is allocating resources to make your product more feature rich than it has to be simply because you think your customer must have those features, all at the expense of making a more basic product work flawlessly.  Your customers probably don’t need those features yet and if you have any paying customers, then you’ve proven they don’t.
  2. Get and maintain momentum in sales/customer acquisition.  If one customer is willing to pay for your product as it exists today, then find another one willing to pay.  Then another.  There is nothing that defines traction more effectively than increasing customers and revenue.  You can be unprofitable and raise money with customer traction.  You can offset costs and hire more people with customer traction.  The world of possibilities to tweak, market and scale your business open up with customer traction.

At the end of the day, these are the only things that truly matter for an early stage startup.  Build the most basic product that you can sell, and then sell it.  And if you can sell it, then don’t build custom features, in fact don’t build any features beyond the product you can already sell until you have more resources on board.  Don’t harden the product for performance, reliability and scalability that you’ll need two years from now, harden it enough to get through the next six months of sales.

Sure, there’s lots to do from this point, but until #1 & 2 are achieved, nothing else matters, so don’t be tantalized to spend the cycles working on other high value, but optional workstreams.  Be ruthless.

Texas Venture Labs / Austin Technology Incubator

My new company, Blacklocus, is an Austin Technology Incubator (ATI) company and we presented yesterday at the Texas Venture Labs Expo in Austin.  I stopped by to hear the pitches of 5 graduating companies, including ours.  I was deeply impressed by the presenting companies, at least 3 of them are truly innovating massive industries including online commerce (us!), nuclear power and combustion engines.  These programs are examples of increasing efforts by the University of Texas to integrate with the local business community to develop entrepreneurs, facilitate investment and commercialize research generated through the University.

Now that we are fully relocated to Austin, I’m really energized to get more involved.  There are several objectives I have for “getting involved” with the local entrepreneurial technology community:

  • Build the BlackLocus brand locally through thought leadership, mentoring and recruiting outreach.  The more we promote our vision and progress, the more attractive we will become to partners, customers and employee candidates.
  • Do my part to further entrepreneurship and development of high growth companies in Austin.  This community has so much to offer for entrepreneurs, venture investment, existing companies looking to relocate and I’d like to become involved in initiatives that promote and actualize those attributes.  Capital Factory and Startup America are examples of successful and far reaching programs to promote our city and develop successful new companies.  There is a real talent shortage here, as in many high tech hubs across the country, and it really is a zero sum game that we need to solve.
  • Actively invest in promising high-growth startups.  As I’ve written about previously, I’m active but picky in my search for investments in new companies where I have something to offer in addition to capital.

Yesterday was a great introduction to a few programs dedicated for furthering local entrepreneurship and I look forward to becoming far more integrated over the coming months.

Do You Sell Products Online?

I spent the past two days at the Innovate Conference in San Francisco put on by X.commerce, the new “open” eCommerce platform created by Magento, GSI Commerce, Paypal, Ebay, Adobe and with deep Facebook, Kenshoo (online marketing), Milo (local search) and Redlaser (barcode scanning) integration.  Magento and GSI Commerce are the two leading platforms for online merchants to set up their website and sell their goods online.  The launch of X.commerce is a game-changer for online retail in several ways:

  • It is a veritable one-stop shop for anyone who sells product online to create their consumer interface and upload inventory, integrate with Ebay, obtain user analytics from Adobe, create advertising and social outreach campaigns and track conversion, launch international (multi-language) platforms, create a Facebook store and enable single click payments through Paypal.  These things alone are not special, but now merchants have the ability to set all of this up with nearly single button clicks.  A merchant can go from having no online presence to having all of these features and more literally in an afternoon.
  • The X.commerce platform is “open”, which creates opportunities for developers to create new applications for merchants and sell them through the app store.  Some lucky few will have the opportunity to partner with X.commerce directly to offer services to merchants.  This is where my new company, BlackLocus, intends to focus.  Because we provide merchants with a pricing engine, including insight on competitors pricing across the web and recommendations on how to price each product, we are a natural and valuable participant on the X.commerce platform.  The benefit to us?  Instantaneous access and distribution to hundreds of thousands of merchants on the current Magento and GSI Commerce and future X.commerce platforms.

This was an extremely useful few days enabling me to quickly get up to speed on what’s happening in eCommerce, the importance of social, the blurring of online & offline and the trends focusing on mobile devices.  I’m beginning to form a point of view about how and where BlackLocus fits into this ecosystem and am energized to get started with the founders to build a great business.  There is much to do!

My 10 Favorite Startup and Tech Blogs

I subscribe via RSS to way too many blog feeds, most of them in the tech/startup/VC world.  Some of the authors contribute daily, others may write once per week but provide unique and well thought out content.  I’m focusing here mostly on non-news blogs (Techcrunch, Mashable, etc. not on this list) and instead on individuals with deep experience as entrepreneurs.  For a broader perspective on popular blogs by category, check out TechStartHub.  If you run a startup, are seeking funding, beginning a company and seeking advice or simply want to stay apprised of opinions and discussion happening in the tech startup ecosystem, then here are my recommended 10 must-read blog subscription feeds, in no particular order (click on the links to subscribe to RSS feeds):

Feld Thoughts.  Daily blog by VC Brad Feld, he mixes both personal and professional insights into his writing.  Brad has been an immensely successful VC, particularly over the past few years.  Naturally, he’s enjoying life and it comes through in his writing.

Startup Lawyer.  There is a wealth of archived content by lawyer Ryan Roberts that talks about how to structure your company, approach valuation, taking in money from Angels and VCs, etc.  He’s a pretty infrequent poster, but the archived content is valuable.

A VC.  Daily blog by legendary VC Fred Wilson.  Fred is usually on the bleeding edge of technology and has a point of view on just about everything technology, particularly trends in the use of technology and startups that are emerging in line with his thesis.

Both Sides of the Table.  Daily blog by another nationally recognized VC Mark Suster.  Mark is probably the most actively engaged and networked in the tech startup community outside of Robert Scoble and spends a lot of time and energy on his blog writing.  No short posting here, usually his writing is very comprehensive and with a strong point of view on his subject matter.

Ask the VC.  Separate blog curated by Brad Feld, he scours all of the VC blogs and re-posts what he believes is the most useful information that day.  Tremendous archived content here as well.

Digital Quarters.  A pretty infrequently posted blog by Ben Elowitz, founder of Blue Nile, but although infrequent, his writing is insightful and comprehensive around whatever topic he is addressing.

Steve Blank.  A serial entrepreneur and founder of E.piphany and eight or nine other companies, Steve Blank (now a professor) has a large following and impeccable reputation in the startup community.

Blog Maverick.  Always a contrarian view on many subjects by this now famous owner of the Dallas Mavericks, Mark Cuban.  He’s a pretty infrequent poster, but his comments are usually pretty insightful whether you agree with him or not.

On Startups.  Blog dedicated to the entrepreneur and written by Dharmesh Shah, founder of HubSpot and several other companies.

SplatF.  Combination news and blog site by technology writer Dan Frommer, he usually posts multiple times per day on whats going on in tech.  What distinguishes him from other writers is he injects his own point of view into news and current events.

Honorable Mention.  Robert Scoble.  Probably the most prolific and connected tech writer on the planet, so much so that its impossible for me to keep up with him and his posts.  He gets an honorable mention because he writes TOO much, but he typically is on the front lines of reporting.

My Favorite Free iPad Apps

I’ve been increasingly using my iPad since the applications are becoming comprehensive enough to almost be a PC replacement.  There are still two areas where the iPad falls way short of replacing my laptop – 1) directory based file access and integration with email attachments (I’m surprised DropBox hasn’t solved this issue or maybe they have?) and 2) “power” work sessions, times when I need to do a lot of typing or editing and need a larger screen.

In any case, here are some of my new faves right now:

Evernote.  Comprehensive notes application that syncs across platforms and devices.  This is an incredibly powerful tool that now has an ecosystem of plugins to make it even more useful for topically capturing and archiving just about anything.  Be sure to download “Ron’s Evernote Tips”.

Skype for iPad.  Finally, Skype’s application for iPad is out, enabling the iPad2 as a chat and video phone platform via WiFi.

FlipBoard.  Centralized news and social media aggregator with a unique interface, turns everything into a page-turning magazine layout, including your Facebook and Twitter feeds.

Zite.  Similar to FlipBoard, but becomes more personalized and “smart” the more you use it by aggregating more of the type of news and stories that you actually read.  This “personalized magazine” space is getting crowded, other very similar apps include Editions by AOL, SkyGrid and News360.

Zinio.  Basically full PDF-like versions of your favorite print magazine subscriptions.  You actually subscribe to your favorite magazines through Zinio (usually at reduced rates) and the full print edition is accessible from your iPad.

Rdio.  Streaming music, on demand and unlimited.  I’m still waiting for the Console.fm and Turntable.fm apps, although both are available through Safari’s web interface.

Join.me.  A GoToMeeting or WebEx competitor and absolutely free.  In fact, you don’t even have to register and there are no software downloads.

360Panorama.  (iPad2) This mobile photo application allows you to take 360 degree photos with your phone by simply turning in a circle, the application automatically snaps the photos and stitches them together.  Here’s Venice Beach.

What’d I miss?

My Favorite Things Right Now

Thought I would share some cool stuff thats made its way into my life most recently.  This is a random walk of technology, books, apparel and music.  Take what you like, leave the rest.  Here goes!

Books

  • Born to Run by Chris McDougall.  For those of you that count running/jogging as a hobby, this is a fantastic read.  Very well written non-fiction about the ultra-distance running phenomenon focusing primarily on the Tarahumara Indians from Mexico’s Copper Canyon Region.  Humorous, educational read that inspired the barefoot running movement in the US.
  • The Big Short by Michael Lewis.  Incredible read inside the 2008 mortgage collapse, focusing on the big Wall Street firms, mortgage banks, Moody’s and others involved in the debacle.  Also includes some individual and small firm stories that made the right bets and raked in jaw-dropping profits, in one example 3 guys trading out of their Berkeley house made $80M on a $100,000 investment.  Crazy.
  • The 4-Hour Body by Tim Ferriss.  I am just now making my way through this 600-page reference manual that is a result of Tim’s personal 10-year quest to find “For all things physical, what are the tiniest changes that produce the biggest results?”  Pretty incredible claims in this book, many of them counterintuitive but personally experienced by Tim and almost always defended by scientific explanation.  Really interesting stuff especially if you’d like to lose some weight or massively increase endurance or strength by spending the least amount of effort and time to do so.

Technology, Music

  • Vitamix 5200 industrial strength blender.  Renee and I are breakfast smoothie freaks – protein, veggies and fruit blended at supersonic speeds to produce an incredibly healthy meal.  Traditional juicers filter the fiber from the ingredients taking out substantial nutrients.  With the Vitamix, you pile it all in and let the jet engine take it from there.  For $500, this blender should create the most heavenly and healthy smoothie ever.  And it does!  Not to mention the 7-year warranty.
  • Google Reader RSS Feed Aggregator.  After getting to the point of subscribing to way too many blogs and news feeds via email, I’ve now aggregated them all into an automated RSS aggregator and have all of my reading in one view.  Since I use Google for email, calendar and contacts (Gmail), its a natural choice for me.  There’s a ton of options out there for RSS aggregation and reading.
  • Polar RS800CX Multisport w/ GPS wrist computer for running and cycling.  This is a pretty awesome device that measures and tracks just about everything – Heart Rate, Speed, Distance, Route (Google Earth), Calories, and on and on.  It’s a wrist mounted device so you can use it for both running and cycling.  The only downside for cyclists is the inability to program routes and see them before and during your ride (like the Garmin Edge 705), but that’s the tradeoff to get a non-clunky, wrist mounted device.
  • RockMelt social browser.  This product is really cool, particularly if you are an avid user of social media, Facebook and Twitter specifically.  It’s actually an entirely new browser, a replacement for Internet Explorer, Firefox, Chrome, Safari, etc. and it rocks!  It functions just as your current browser does, except it integrates your social media applications around the border of the browser.  No need to have a separate tab for Twitter or Facebook, you can see with a glance all of your social media feed information and which of your contacts are online.  There are mobile apps as well so you have a seamless experience no matter where you are and which platform you are using.  A friend of mine just took a leadership role at this company, which recently closed a $30M round of funding from tier 1 VC’s.
  • Turntable.fm shared music experience.  This is a brand new service where you can create your own rooms by music theme, invite your friends to join, and jam out by DJing, searching for and playing your own music.  You can also join other rooms based on the type of music you are in the mood to listen to.  This is an incredibly social music experience, with real-time chat, avatars, points system and just great music.
  • Uber car service in SF and NY.  If you travel to SF, Palo Alto or NY and want a fantastic, hassle free car service (50% premium to taxi fares), download the Uber app and enjoy the experience.  Create your profile with credit card information, then simply request a car through the app.  It will tell you precisely how far away the driver is, provide her name and ratings and when your ride is finished, you jump out no payment or tip required.  Your credit card is charged automatically and receipt emailed to you.  SF is an awful city to hail a taxi, particularly when it rains.  Uber to the rescue!  Watch out for these guys they are about to expand into Seattle, Chicago, Boston and DC.
  • Quora answers everything, and does it intelligently through crowd sourcing.  I’ve been really impressed with the quality of topics, answers and discussion on Quora – a more opinionated but real-time wikipedia.  You can follow topics or people and because answers can be “voted up” by the community, it ensures the most valuable, useful answers are seen first.

Apparel

  • (Near) Barefoot running with Vibram FiveFinger shoes.  After reading Born to Run, I gave barefoot running a go more as an experiment that a convert.  So far its been good and pointing out how under-developed certain muscles, especially calves, have become using cushioned running shoes and (arguably) improper form.  I’m still using a mix of barefoot and traditional running shoes in order to keep my mileage up as I ease into the new process and attempt to avoid injury.  Another “how to” book for barefoot running is The Barefoot Running Book by Jason Robillard.
What are your favorite things right now?
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