SacStarts - advice

What is scale?

Adam Kalsey — Mon, 28 Nov 2011 00:50:23 +0000

As an entrepreneur, you’ll often hear investors and advisors talk about scaling the company. What do they mean by this?

I heard a scientist once talking about those postwar horror movies in which an insect gets irradiated and grows to the size of a house. It begins walking around and terrorizing the city. The scientist pointed out that if a creature did grow significantly larger than its natural state, it would be unable to move. The design of limbs and organs that works at a small size is completely unable to function at a larger size. Similarly, if you were shrunk to ant-size, your capillaries would only be large enough fow simple molecules, and not complex blood cells. You’ld die. Clearly Rick Moranis was no scientist.

The same thing happens with a company. The things that work well when you’re small don’t work at all when you’re big. As the company increases in customer base, you have to get better and faster at sales, support, and on boarding new customers.

In the early days, all these things will be time consuming and costly. You don’t know how to do them well. You may be missing team members. But as you grow, that has to change. Not only will later customers be harder to please, but if your idea is any good, you’ll face mounting competition.

You’ll also find that you can’t grow and do all the work yourself. Your time will need to move into guiding the organization and you’ll need to hire. Expect that future hires won’t be as good as you are. They’ll need processes and training to be effective.

When someone asks how you’re going to scale the business, we want to understand your plans for growing beyond what you and your founding team can do today. How you plan on turning this into something bigger than a small business. How are you going to grow without also having to grow your team at a linear rate? How are you going to ensure that your costs don’t grow at the same rate as your sales? How are you going to take sales, marketing, and new customer on boarding processes and make them work when the team is more than just you?

How can you take the business, grow big fast, and not have expenses and support issues crush you? How do you ensure that you don’t spend all your time as a business solving the same problems, but have the time and money to solve new ones?

Excerpt:

As an entrepreneur, you'll often hear investors and advisors talk about scaling the company. What do they mean by this?

Advice for the new entrepreneur

Adam Kalsey — Sat, 13 Feb 2010 17:08:32 +0000

Matt Mireles from SpeakerText writes a bullet-point list chock full of advice for the first-time entrepreneur.

No one is interested in the company you’re going to start in the future. Starting is a declarative act. Just go for it.

I talk to a great many erstwhile entrepreneurs that tell me all about their ideas and all the things that they’re going to do when they start their company. Or people who have started but aren’t really getting anything done because they can’t find the right co-founder or they need to design every last detail first, or they don’t have the marketing copy for their web site quite right yet.

Entrepreneurs do. We take an idea and a market and drive to make it happen. Figure out what’s standing in the way of you getting stuff done and just go through it. Once you’re actually building your company, a lot of those things that looked insurmountable turn out to be no problem at all.

Lots of business-y, idea-type people who say they’re looking for a co-founder are, in reality, looking for what is best described as an “engineering bitch.” Here’s how the pitch sounds from the engineer’s perspective: ‘For ten whole percent of equity, you will slave away to build a prototype out of my shitty idea, not have any say in the decision-making process…and oh yeah, you could be fired at any point.’

I don’t think a lot of business people get this point. Engineers aren’t just sitting around awaiting input so they can build something. They aren’t machines into which you feed an idea and a finished product pops out the other end. They have ideas, too. So why would they want to build yours for no compensation when they could spend their time building their own?

Want to have a good technical co-founder? Make your idea theirs.

Over the last 15 months, I have pitched nearly every sentient being I have met. This includes a guy I met at 4am after doing CPR on his mom (I’m a paramedic). The dude turned out to be a senior partner at a major international corporate law firm, and 6 weeks later he offered to take me on as a pro bono client.

As a startup, obscurity is your biggest problem. Constantly pitching your ideas helps solve that. How’s the great tech co-founder, the lawyer, the perfect first customer ever going to find you if they don’t know about you?

Pitching constantly also means you’ll get a constant stream of advice. Most people you talk about your company with will offer up thoughts about it. Free consumer research? Free marketing advice? Yes, please.

Every lawyer will give you an hour of their time for free. Remember that. Need 10 hours of legal counsel? Talk to 10 lawyers. … when you need to actually hire a lawyer, you’ll know what a good one sounds like––and have a fat rolodex of people you’ve already talked with to draw from.

The world is full of free and cheap advice. There’s all sorts of resources out there like this. For $100 I spent an hour with a CPA over coffee and picked her brain on how to set up the books and ensure I was filing taxes properly. I sent my exec summary to a half dozen angel investors and asked them for a critique. A couple of patent attorneys bought me lunch and spent two hours explaining to me exactly what’s involved in getting a patent and why I probably don’t want one.

Excerpt:

Matt Mireles from SpeakerText has a bullet-point list chock full of advice for the first-time entrepreneur.

Get a co-founder

Adam Kalsey — Sat, 30 Jan 2010 20:27:47 +0000

Got an idea for a technology product but don’t have the technical chops to build it yourself? You’ll need to find yourself a cofounder. You’re building a technology company, but have no technology people on the founding team. This leaves you with three options. Hire, outsource, or find a technical co-founder.

It’s nearly impossible for a technology company to succeed by outsourcing their early product. Don’t even think of going that route. Freelancers or outside firms can’t possibly deliver what you want because they don’t actually care about the product or the outcome.

To hire someone full time, you’ll need to pay them a reasonable wage. For someone that’s capable of taking the business ideas you have and translating them to a real working product that won’t fall over as soon as people start using it, you’re looking at at least $80k/year in Sacramento. Don’t think you’ll go get funding and then hire someone. You’re going to need a product before you can get any funding. Gather together whatever funding you have now and hire a developer. It’s going to be important to hire the right person the first time, so if you don’t have anyone who has hired technical people for small teams before, get help screening candidates.

Your third option is to gain a technical co-founder who’s willing to build this for a cut of the company. Expect to give them 25-30% of the company, but make sure you have a vesting arrangement so some crook doesn’t sign on, take 30% and quit the next day. Again, get some help screening them from someone who can tell if they know what they’re talking about.

Here’s the thing… You can’t just go out and “find a co-founder” any more than you can go out and “find a wife.” Your co-founder relationship is just that, a relationship. You’ll have a significant relationship with this person, and they with you. Likewise, they’ll have a serious relationship with the business. You need someone to fall in love with you and your idea and to love it enough they’re willing to take tremendous risks in order to be involved. People grow into relationships, they aren’t recruited into them.

So how do you find your co-founder? Same way you found your wife. You meet lots of people. Put yourself out there. Make sure people know you’re available. Date.

Talk about your ideas with everyone you meet. Most people won’t want to hear about it. But some will have feedback. This feedback will shape your ideas and change your business. Along the way, you’ll meet someone with a technical mind that gets just as excited about your idea as you do. You’ll find that the two of you can’t seem to spend enough time talking about the idea and the business. You’ll know that this person is the one.

Startups on the Cheap

Adam Kalsey — Sun, 25 Feb 2007 18:41:58 +0000

Should you be a cheapskate to run a startup?

Sac Executive has a summary of an article suggesting that the single most important thing in your startup during the early days is capital. It needs to be conserved and only spent when absolutely necessary.

Don’t lease an office, buy the cheapest workstations you can find, and skip the phone system are all suggestions from the article. Every dime is precious; when you run out of them, the game is over.

Guy Kawasaki wrote a year ago about the Art of Bootstrapping and explained how to build your business based on your revenue. Along with explaining how to realistically forecast revenue, Kawasaki suggests such cheapskate techniques as underhiring and finding cheap talent instead of superstar (and super expensive) employees.

If you’re conservative about how you spend your money it will last a lot longer.

Working with kids at home

Adam Kalsey — Fri, 19 Jan 2007 23:03:28 +0000

Web Worker Daily has a great article on working at home when you have kids.

Particularly with younger kids around, you may have to give up some of this flexibility to their needs. If there’s a part of your day that requires the utmost concentration, schedule that part during their nap time, or after their bedtime, or while they’re off at school

The site’s readers jumped in and started handing out their own advice and home working stories. The result is a good list of suggestions on how to handle children around the home office. My favorite is John Engler’s backyard clubhouse.

Other good ideas center around making kids feel welcome in your office but making sure they understand the limits.

One unexpected thing I’ve learned throughout the years is not to treat the home office as an off-limits spot or someplace that’s not for children. I discovered that reverse psychology works well. The more I tried to keep her out, the more she wanted to come in! The more I set up the office to make space for her, the less she came in. The challenge, it seems, was gone.

…and…

We have it that if the door is closed, she can’t barge in unless it’s an emergency (once we worked through being out of hot chocolate is not an emergency, it’s worked fine.), but she has to knock before she enters.

Another reader pointed out the importance of helping your children understand why you’re working at home.

They are 5 & 8, but understand the benefits and downsides of me working from home.