start smart: positioning your software venture for success (2 hour version)

Start SmartPositioning Your Software Venture for Success

http://sixteenventures.com

Agenda

• Pre-Game Prep

• Idea Due Diligence

• Technical Resource Engagement

• Raising Capital

• Missing Pieces

Ideas = $0.10/dozen

• ideas don’t matter; execution does

• people won’t steal your ideas

• you need feedback from others

Pre-Game Prepmental

• Focus

• Failure IS an Option

• Fear

• Motivation

Pre-Game Preporganizational

• Equity

• Software Ventures 101

• Does the Founder need to be a Programmer?

Pre-Game Prepbusiness

• Revenue Model

• Technology Has ZERO Value

Focus

• One Venture at a Time

• Don’t be greedy

• Don’t “hedge your bets”

• but <<famous entrepreneur>> has six ventures going at one time

• he’s famous for a reason; you aren’t. Don’t worry about what he is doing. Besides, he has people.

Mental Prep

Failure IS an Option• Nobody wants to fail but you must know it is

possible

• don’t let the fear of failure keep you from trying

• If you do fail, fail fast

• do the “hard work” early to avoid failure later

• do not hold onto an idea that won’t work

Mental Prep

Fear is Okay

• without fear, you lose focus

• lack of fear breeds sloppiness

• fear is a very personal word, and at this point in your venture, it is personal

Mental Prep

Motivation

• Desperation is the wrong reason to start a business, especially a product-based business

• Looking for an “out”

• Consider Service-oriented business rather than a product-based company

Mental Prep

Equity

• Understanding It; it is much more complex than you think

• Two-Sides to the story

• Until you are ready to engage proper legal counsel, you are not ready to discuss equity

Org Prep

Equityyour perspective

• Equity is NOT currency

• you are too early to be dealing in equity positions

• hold onto as much as possible for as long as possible (this is not greed)

• entrepreneurs often feel like those they bring in “need some skin in the game” as if that will get more out of them

• pay cash whenever possible; it will save you money in the long-run

Org Prep

Equitytheir perspective

• you are asking them to invest in your venture

• equity only pays on exit or buy-back

• without control as well as equity, they are at the mercy of your performance or whims

• cash is king

Org Prep

Software Ventures 101

• ISV defined

• On Premises vs. On Demand

• If its on the web, its a software venture, right?

• Growth vs. Lifestyle

Org Prep

Founding Programmer?

• Not required

• Should be technical (or willing to learn)

• should not learn to program

• focus on the business

• you wouldn’t learn to weld just because you wanted to open a body shop

Org Prep

Early Team Members

• Be Cautious

• Attorney

• Advisor(y board)

• Board of Directors?

Org Prep

Revenue Model

• what is a revenue model?

• 7 different ways to make money

• do startup software ventures need to have a revenue model?

• You can’t know what revenue model(s) to choose at this stage in the game, but you MUST be thinking about it

Biz Prep

Technology = 0 Value

• the fact that you use Ruby on Rails or Java to build your app means nothing

• Postgres vs. MySQL? Who cares

• Ajax UI? Android client? Nothing!

• Solved a problem? Aha! Now we’re onto something

Biz Prep

Idea Due Diligence

• Goal: determine if the idea is a good idea, or a good business

• Ideal Idea

• Validation

• Detailing your Vision

• Presenting your Vision

Ideal Idea

• It Solves a Real Problem in a Low-tech, fragmented vertical market, with few relevant competitors and a proven business model

• Deviating from this rule increases chance of failure

• Adhering to the rule does not guarantee success

• Whole Product Solution, not just a Feature

• No “Me Too” products just to be “in the market”

Market Validation

• is there a market for the product/service?

• Primary vs. Secondary Market Research

• Target Market Identification

• Competitive Research

• Sustainable Competitive Advantage

• Talking to Potential Users

• You Must Be Present to Win

Detailing Your Vision

• Extract it from your brain

• put it into a format that other people can make sense of

• screen mockups, process flows, etc.

• You are not a Product Manager... forget UML, Req. Docs, etc... just draw pictures!

• use this to get feedback, engage technical resources, and/or raise capital

Presenting Your Vision

• Show trusted advisors, colleagues, friends, and family your vision drawing

• make sure that they “get it” immediately from your drawings... if they don’t, refine

• determine minimum features required for version 1.0

Technical Resource Engagement

• Partner, Employee, Consultant or Software Development Firm

• Protect your Intellectual Property (IP)

• Build vs. Buy

• Be True to your Vision

• Hosting / Platforms and Architecture

Raising Capital

• Go-to-Market vs. Raise Money

• Money Talks

• Choosing Investors

• Formal Business Plan

• Exit Strategy

Missing Pieces

• Patents

• Go-to-Market Strategy vs. Marketing Plan

• Corporate Structure

• Operations, Management, Staffing, etc.

Until Someone Pays You, Its Just an Idea

http://sixteenventures.com