It seems there’s been a surge in activity lately of people reaching out to me for help finding a co-founder for their idea. Of course, I tell them the best thing to do in Atlanta is to start going to ATDC events. Absent the tactical tips to actually find someone, I believe it is important to think through the complementary attributes desired in the ideal co-founder.
Here are some topics where you might be one side and could benefit from a co-founder with the other side (these aren’t opposites):
- Sales / engineer
- Big picture / tactical
- Aggressive / laid back
- No fear / measured concern
- Ideas / details
- Passion / passion (everyone needs this!)
Finding one or more co-founders that complement your attributes, talents, and skills is one of the most important steps in a startup. I recommend thinking through it carefully.
What else? What other complementary attributes do you find important?
Late last week I was talking with a friend who’s thinking about launching a new product in the web application testing and monitoring market. The question he was trying to answer was “If there’s such an obvious need for the SaaS product, why haven’t more companies already purchased one?” To put it another way, there’s such a clear pain solved by the product, yet several potential customers that were surveyed knew they needed something but haven’t purchased anything without a good reason.
As part of the customer development process, one of the most important pieces is to come up with the right questions to ask potential customers. It is more difficult than it sounds. Here were some of the questions asked:
- Have you looked at any webapp/website testing and monitoring products?
- What are some issues you’ve had with your webapp/website?
- What type of system would you be interested in?
- How much would you pay for a system that provided xyz piece of mind?
- Why haven’t you already purchased such a system?
It is especially challenging since the answers he shared with me from talking to potential customers didn’t provide any clear resolution. Even with no obvious outcome, customer development is an exceptional process when launching a new company and/or product.
What else? What other questions would you ask a potential customer?
At the end of last week I had the opportunity to attend the Entrepreneurs’ Organization (EO) Global Leadership Conference (GLC) for the second consecutive year. The two day event brings 400 EO chapter leaders from around the world together to share best practices, learn from expert speakers, and have a good time.
As the upcoming membership chair on the EO Atlanta 2010 – 2011 board, I spent most of my time with other membership chairs in sessions facilitated by Branden Ames, CEO of Able Technologies. The most powerful takeaways from the sessions were that EO is really to facilitate the entrepreneurial lifestyle, not just building the better entrepreneur, and that telling personal stories are the most effective recruiting methods.
During the membership track and the keynote remarks there were numerous personal stories shared. Here are a few told first hand by members (not secondary sources):
- A member in EO Arizona crashed and died in his plane killing his business partner and COO as well. The EO Arizona chapter president jumped in and had his company, on his own dime, coordinate the funeral, brought in his forum members, and interfaced with the deceased member’s father to help with the business.
- A member in EO South Florida died in a plane crash killing his wife and son, but leaving a daughter behind. The members of his forum reached out to the daughter to be there personally for her and help work through the devastation.
- A Muslim EO member from Orange County met a Catholic EO member from Mexico City at an event in Mexico, only to learn that the Mexico City member’s son had late stage cancer and had run out of medical options in Mexico. The Orange County member immediately opened up his house in the U.S. and coordinated help with the best doctors in California. In the end, the son didn’t make it but the two EO members forged a deep relationship for life.
While these are dramatic personal stories, they were told by a member involved firsthand, making them even more emotional. EO truly is for the entrepreneurial lifestyle and the relationships created are priceless. Stories make the power of EO even more compelling.
After looking at yesterday’s post on Where to Start with a Raw Idea, I realized that the link to startup advice and the link to the VC site in the comments might overly imply that raising money, especially VC money, is the way to go. 99% of entrepreneurs shouldn’t raise professional money. Let me state that slightly differently: the majority of entrepreneurs shouldn’t raise money and 99% of entrepreneurs shouldn’t raise money from professional investors.
Here are some times when raising money does make sense:
- There are some key mentors you’d really like to have a stake in the business, and have offered to invest for a small percentage of the business (e.g. Shotput Ventures)
- The business you are in is a winner-take-all market where if you aren’t the leader you’ll likely be worthless (e.g. eBay for the online auction market)
- The type of business is incredibly capital intensive such that there’s a large amount of investment required to be successful (e.g. certain hardware companies)
- From a lifestyle perspective you need to be able to pay yourself a below market salary to keep your spouse happy, requiring outside capital (this is a tough one)
As you can see, there aren’t too many reasons to raise money. And, most businesses shouldn’t raise money.
What do you think? What are some other reasons to raise money?
Last week I talked to a couple of good guys that had a raw startup idea who were looking for feedback. Of course, I had them go through the five startup questions in advance but the idea was at such an early stage the responses weren’t meaningful. There was also the challenge that they didn’t have enough startup background and context to provide meaningful answers. They tried but it still wasn’t good.
Here’s what I’d recommend doing when starting out with a raw idea and no background in startups:
- Spend three hours reading Mark Suster’s posts on Startup Advice
- Spend an hour making a competitive matrix Google Spreadsheet listing out what search terms you Googled, the company name, company website address, company tag line, brief company description, and a high/medium/low rating of how close to a competitor they are
- Spend an hour writing full answers to the Shotput Ventures application questions in a Google Doc
I’m confident that going through this process will help set the foundation for more effective research and a more constructive conversations when talking through a raw startup idea.
What else? What would you add to the list?
After talking to a couple early stage startups this week, and trying to help, I realized it would be good to have a list of standard questions to start with to help analyze and understand a business at this stage. By early stage, I’m referring to a business that already has a product and paying customers, but under $1 million in revenue and no repeatable sales process.
- What are some of your customers?
- How did you find them?
- How long was the sales process from first conversation?
- How much are they paying?
- What’s your ideal customer?
- What have you tried to generate leads?
- What are your sales challenges right now?
- What’s your positioning?
- What’s your pricing model?
- Where are you advertising?
- What have you tried that didn’t work?
- Who are you competitors?
- What Google search term best represents your business?
- What do you want people to think of when they think of your business?
- What are your marketing challenges right now?
- What’s your burn rate?
- How many months of cash do you have left?
- What are your fixed and variable costs?
- Where are you in the fundraising process, if at all?
- What are your operations challenges right now?
- What’s your product written in?
- Who does the development?
- What’s the engineering process like?
- What’s the product management process like?
- What are your technology challenges right now?
This is a good start to analyzing an early stage startup and I’m going to use it in the future.
What else? What did I miss that is useful to analyze an early stage startup?
I finally figured it out today. You know, when there’s that thing that has been nagging you for a while and you know the answer is out there, but you just don’t know what it is. There’s a continual debate between lifestyle and growth businesses, specifically, what’s the difference between the two. Here it is, the number one difference between a lifestyle and growth business:
Growth businesses have a repeatable sales process that doesn’t involve the owner/founder.
It seems so obvious. I’ve talked to many entrepreneurs over the years and most talk about increasing revenue, but it is solely dependent on them. The entrepreneurs with a growth business, in growth mode, are working on optimizing their repeatable sales process. There’s a fundamental difference between lifestyle and growth businesses, and the repeatable sales process is it.
What do you think? Do you agree or disagree?
While reading the Delivering Happiness: A Movement post on TechCrunch, I came across a quote that really summarizes what we look for in new hires and epitomizes our corporate culture. In the article, when responding to the question about how Tony Hsieh hires such great people, Tony says, “I only hire people who smile.” Yep, that pretty much sums it up for us.
We focus on the following core values:
People who smile during their interview correlates nicely with our three core values.
What core values do you look for when hiring? How do you know you have a match?
At the end of last week we made the announcement about Shotput Ventures 2.0. The general idea is that we’re doing the same type of investing in new, capital-light web services companies, but are no longer having a single class each summer, like last year. Instead, we’re having an always-open application where teams can apply at any time. Teams that are accepted, and thus turned into companies, get 12 weeks of mentoring, learning, and introductions from the Shotput partners.
Here are some of the reasons behind the changes:
- We proved last summer that we could get eight great companies to move to Atlanta for the program, but the challenge was keeping them here (three stayed and five moved)
- Great teams and ideas don’t want to wait for the summer to get going, and thus making Shotput a year round program opens us up to more opportunistic funding
- We thought there was more pent up demand in the Southeast for a program like Shotput, but the majority of applications both years were from outside the Southeast
Atlanta no longer has a Y Combinator clone but still has a fund committed to the spirit of it, and will invest in 3 – 5 companies per year.
What are your thoughts? What do you think of Shotput Ventures 2.0?
After we won an award last week for the third fastest growing company in Atlanta, my phone started ringing off the hook from service providers that I’ve never met calling to say congratulations and introduce their company. I had calls from lawyers, accountants, commercial real estate brokers, staffing agencies, and other random providers. Not a single one tailored the call to me with a strong value proposition. Let me repeat myself: no one left a meaningful voicemail.
Here’s what I would do if I was in their position:
- Use LinkedIn to see if we know people in common and mention their names in the email (the best would be to get one of those people to do an introduction)
- Review my site to get a feel for what we do and come up with an example client that is related and talk about a success story with them (e.g. provide social proof)
- Follow me on Twitter and send an intro tweet from there as well explaining how they think they can help
- Read my previous blog posts and start to add value through comments
- And, finally, the number one way to make their cold call effective: make an intro to a potential prospect that could use our product
Have you had these calls before? How else can the cold caller improve his or her effectiveness?