Well for a weak and a half of tar and the roof and the odor it is finally over with. Now I can think clearly. So where were we last week? Recapping I neglected to put in one thought. I leave it up to you to find the merits. Most investors will want to see mountains of data to support any R&D project. Getting to the all encompassing proposal with the almighty prototype that will blow them away. Well take this idea and throw it away because if you want to do a startup, it is best to have a tiny amount of intellectual property because more than likely there are problems. In the startup phase, if it is a tiny project from the beginning, and grows every day or week, you are giving the organization what it needs: the soul of the intellectual property. I cannot stress how important that is to future funding. It is everything to future funding as the intellectual property has a better chance of being compliant and less hassle with venture capital and their due diligence.
So what does a prototype then represent? I would say as others have, written out in one paragraph, what it represents and what you are doing. Make it simple and concise and do not bore your audience. Understand who your audience will be as the tone of the paragraph will change from group to group. Your prototype will then be an extension of that paragraph. Should it work? That is up to you. I would say you want to capture your prototype in one single picture. What that picture says should fill in your opening paragraph’s gaps and create the whole picture in a simplistic way. That is it, and why? Because when you are in that elevator with Bill Gates, you have 30 seconds to convey your thoughts in a compelling message that will make your listener want more. You then whip out your picture of what it is you are doing, and wait for the “aha” moment. That is your aim that an “aha” happens, and if you can recognize it, then ask for the seed money or whatever else you have in mind. Just remember that whatever you ask for no matter how neat and cool your new application is, the market has to be there.
Market and what is it? Do you want to monopolize a concept? Good luck trying to fix value to it. There is an old saying in the music business: “Do not worry about Guitar Center moving right next to your music store, competition is good” This is sage as competition is what defines your market and competition therefore is good, you just find their product gaps and fill it. Monopolies are for the birds. Why do you want to battle all the forces in the market place when competition takes most of it on for you. And well before you arrived on the scene?
A note on teams. This is very important and should be your first priority to establish. You see if you can put together teams and be successful you do two things: 1. You demonstrate a unique ability in convincing others to agree on your seed concepts. 2. You get there faster. Why on earth do you want to drive yourself mad being the only one in your whole world that believes in what you do? Now remember you do not have to bring people on board to be in the team, they can be your lawyer, your accountant, or your banker. They can be on the other side of town or the other side of the world. In fact with programs like Cisco’s WebEx, there is no reason to physically have a single place to meet. The board could meet in their homes and the same goes for engineers, programmers, sales people etc… So you ask how to do I keep them motivated and in my control that they do not steal things and they work. This is not as complex as it sounds.
Stock options are a great way to keep people motivated, especially with a company that has a forward thinking CFO. In fact the companies that have CFO’s, 9 times out of 10 do much better than the corporations that get by without a CFO. To me the CFO is the make or break person in the long term sustainability of any company. Another way to keep people in line and keep people motivated, is to let them see at any given moment what the company looks like, and what their efforts are doing to the bottom line. If an employee sees that what they do affects their own stock options, they are more willing to do the right things that earn the company money. There is a nifty program out there from Net Suite. You also can couple it with Packet 8 phones services. It’s expensive, but if at some point you have employees you better have a system like Packet 8’s and NetSuite’s to enable you to daily track the performance of the company, and again, the employees that do the work and make the company revenues need to see their daily impacts to the ends of the financials, to the sales, to the R&D costs. This is not only a great way to keeping employees, but enables everyone to have a sense of acting not just as an employee that goes home everyday not too excited about work, but instead infuses a shareholder excitement that leads to thinking outside of the box, (a book to read : A whack on the Side of the Head, Roger von Oech), being more creative and being excited about brainstorming. This is what fails in large corporate structure, the excitement is just not there anymore. Politics and back stabbing are what usually gets people to the top and those obscene bonuses. Those companies today are almost all in financial trouble. Instead your nimble and dynamic startup has the capability of fostering all the good and right ideas that creativity generates.
I am not going to get into the mechanics of stock options only to say this. Bring on board experienced and excited CFO’s. Do your background checks and make sure you know every company this person has worked for. Use E-Source with the Federal Government to begin the process and hire a company that specializes in background checks. I would not concern myself with FICO credit score, as the story they tell has little to do with day to day operations. Instead it is far more important that this person is telling the truth in the places and times they have worked. The power the CFO has over the millions of dollars in the business is immense. Make sure your President has the capacity to overview all accounts. With the right kind of person your stock option plan can be easily crafted from the CFO and the financial expertise and long range planning that position brings. Along with a capable legal team, your stock options will be an attractive force to finding and retaining top expensive people. There just is no other way to do it. Employees need to trust the plan will work. You need to feel good about the plan too. Nothing worse than over estimating company potential. Better to underestimate and have something great to talk about at your annual meetings.
That's enough for now. I will talk more on the mechanics of marketing.
This is exciting if you are at this point! We are!
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