Thursday, November 29, 2007
This week has been a somewhat tough week. I've met with 3 different law firms to try to finalize our representation and begin incorporation. I had mixed feelings about one and really liked the other two. One of the other two had much more favorable terms to the deal (which I will explain when things are finalized). So we thought hard about moving forward. In addition, the more favorable firm had patent experts in their office, whereas the other firm had to recommend a boutique patent firm for us to use. What's that mean? Well, at a time like this when we're watching our money, a one stop shop for legal help is our best option. Most of these firms are giving you services for deferred payment terms along with taking a little piece of equity. We'd be able to get our patentable technology looked at and patents potentially filed, all for services with a deferred payment.
Anyway, we were put before the committee of the firm with better terms and were supposed to hear back yesterday. We heard that it had been delayed a day until today. Still nothing. It's frustrating because there is a lot of stuff I have on the back burner that can only be done once incorporation is done - partnership agreements, employee agreements, equity - all that stuff.
One of the lawyers we met with told us that you really want to be sure that your firm is giving you enough attention - but not too much, because that means they have no business. What's too little attention? Who knows - but if there are important issues that arise down the road, we don't want to wait 3 days for our counsel to get back to us. By then, the deal/issue could be dead.
Posted by Lefty at 9:06 PM
Sunday, November 25, 2007
Intellectual Property (IP) is an incredibly important part of your company, especially if you're a software/IT company. It can play a factor in almost every conceivable aspect. I won't really go into it yet, but it's important when you are raising money (investors are very interested in IP when they give you money), defending your own technology, or selling your company. What I will go into in this post is the process for determining the different types of IP your are interested in protecting.
I didn't have much experience, personally, with IP before starting this company, so this is all new hat to me.
The first thing to understand is the difference between copyrights, trademarks, trade secrets, and patents. This will help you determine what is right for you.
Copyrights generally involve the protection of literary works such as poems, books, music, etc.
Trademarks are distinguishable words or names for your business or services that you offer (McDonald's, Coca Cola, etc).
A trade secret is information that is valuable to your business where you have made an attempt to keep that information secret. In addition, were that information to be released, you would suffer material losses. Some examples of trade secrets are Coca Cola's formula and Google's search algorithm.
Patents are basically rights to an invention granted to you by the Patent and Trademark office that generally last for a set amount of time. Though pharma patents tend to be dealt with differently, generally a drug company has the right to sell and market their drugs for a period of years before another company can begin to sell generics of the same chemical combinations.
One things to keep in mind when deciding whether your idea is a trade secret or a patent is to determine whether making your idea public will help or hurt your company. If you file a patent, everything becomes public knowledge. Google would have to file their algorithm with the patent office to receive patent protection. That would probably not be a wise move for obvious reasons. Same with Coca Cola's formula.
We actually are dealing with several different IP issues. One is a copyright issue and the other is a patent issue. I won't be discussing the copyright material because it hasn't been fully developed yet. I will discuss the patent process in the next post, because that's what I've been researching now.
Posted by Lefty at 10:41 PM
Yup, it's time to get back to work. Hopefully you all stuffed yourselves on turkey and gravy and got together with your families. I did. This week will be an interesting week for us.
We're meeting with our 3 law firms to decide who will represent us and to finally incorporate. In terms of legal help - the important things to keep in mind if you can't pay for it now are this: what do you have to give up to get representation (if anything)? What will they provide for you? I spoke with Gunderson Dettmer last week and basically was told that a good part of the incorporation isn't done by the partners you are working with, but by associates (or paralegals, etc) - it's all fairly generic. So if you have interesting legal issues, make sure your firm can support them. We may be working with some international employees (outsourcing) which is something we'll need to understand.
Posted by Lefty at 10:25 PM
Wednesday, November 21, 2007
I was reading an article yesterday that talked about a must read business book - "The Innovator's Solution". All I could think about was, here we go again. I've heard so many people telling me that I had to read these "must read" business books. From "Good to Great", "The Tipping Point", "Blink", whatever the hot book of the month is. This is my take on most "hot" business books. They're garbage. I mean, sure, they provide some insight, but that's only in the first few pages/chapters of the book. Literally. I put down about half the business books I read because I can't stand the reiteration of points compounded with the most common sense advice you've ever heard. So here's my advice. If you're writing a business book - cut it down by at least half. Write it in Cliff's Notes form. Entrepreneurs don't have the patience. And if you're a business book fan. Don't jump on the bandwagon and tell me to read this month's NYT Bestselling business book, unless it's really worth it.
I recently read "The Starbuck's Experience" and "Search" - and I had to put both of them down. They weren't particularly bad. But midway through I'd had enough - as has happened with so many others before them. I will happily plug two essential business books though that I think are great! One of them is "Winning" by Jack Welch. Say what you want about the way Jack's management style outwardly appeared or the way his personal life turned out - the book and his lessons are great. Also - this one may be a little bit of a reach for some of you, but "The Diamond Cutter" by Geshe Michael Roach. It's a Buddhist approach to doing business. Basically, it discusses business ethics with a Buddhist twist. And yes, Buddhists can make money - and he makes a ton of it - so don't be turned off by that. Also - it's a book you can constantly refer to throughout the years. I find myself picking it up every now and again to be reminded about some of the principles in the book. You don't need to follow everything it says, but it provides some good guidance.
Posted by Lefty at 9:32 AM
Monday, November 19, 2007
This post is a bit long... sorry 'bout that.
You thought that coming up with the name for the company was the hardest part? Now try finding the domain name to go with it. That's why so many software companies use unique names - or at least unique spellings for those names (Flickr, Google, Napster, Orbitz for example).
Our first shot at a company name was Yoo. It was a play on "You" because our idea is to develop a much more distinctive representation of the user, online. We are keeping the idea low key for now, but it will make more sense as we release details of our technology.
The Yoo domain was taken by a large international design firm. Really large. There was no way we were getting that domain name. So after getting all excited for figuring out a unique name, it was back to the drawing board. We came up with a new name, one that we ended up liking a lot more anyway. It was Vyoo. More like "Virtual You" or "View". By the way, it's pronounce "view" - yes, we've heard it pronounced quite a few different ways already. Vai-yoo is my favorite.
The website didn't go anywhere, but it was owned by another party (you can look this up on Whois). I decided to email the owner and try to negotiate a sale. He didn't respond to my initial email, so it was time to do some research. I wanted to find out what the website had been and to try to get a valuation for the website.
There is a great online service called The Wayback Machine. It's basically an archive of the internet. It keeps historical references to pages. Wonder what Google looked like back in '98 (here)? Not much different from today.
I used the Wayback Machine to get an idea of who owned the site and what it had been used for. Not much, I found out. It forwarded to a porn site some years ago. Which was not a good sign. I figured I was dealing with a somewhat sketchy dude.
My next move was to determine the likely value of the website since I had never heard back from the owner. To do this, you can use a domain appraisal service. The most well known is Sedo, who also does domain brokerage. I engaged with them for their domain brokerage service which included a domain appraisal. They, in turn, began to negotiate with the domain owner. Although the appraisal was fair, I was not impressed with how they got in touch with the owner. They simply looked up their contact info in the Whois database and tried to contact the owner. The same thing I had tried. I was hoping they had relationships with registrars and hosting services so they would have additional avenues for contact. When I found out that this was all they did, I called off the negotiation and decided to do it myself.
I sent another email to the owner, this time giving him a background of who I was and what my intention with the website was. I also sent it from my school email address - to add some credibility to my request. I had received a tip to personalize yourself to the owner. You never know who or why people are hanging on to websites (personal reasons, professional reasons, or anything else). He wrote back. Unfortunately, there wasn't much of a mutual negotiation. He said he wouldn't accept anything under $3,000. And that was his final offer. He said he was in no rush to sell the domain either. I'm not going to lie, we were sort of desperate. We didn't have much room for negotiating and we feared that he would raise the price if we didn't lock it down now. Unfortunately, we would have preferred to spend the money elsewhere.
I remained in contact over the following weeks, wondering if we should counter. I was nervous that he may never respond, since he was so difficult to track down in the first place. I did some research on who he was to try to understand a little more about him. He was a software engineer. Hmmm. So was I. We are stubborn people. I decided not to aggressively counter. I ended up paying him the 3 large and waited (which by the way, was the exact price Sedo had appraised the site for). And waited. A week later he accepted.
Relieved. Now we had to figure out how to transfer the domain. He was in AUS as well, so transferring the cash would be interesting too.
He turned out to be a great guy and very trusting. I forwarded him $500 through PayPal - because anything over $500 incurs fees. He transferred the domain. This required me to sign up for an account (I used www.godaddy.com) and initiated the transfer. A week later, all was set (it takes usually 5 days for the xfer to go through). Now I have to go and mail the balance by check.
Posted by Lefty at 9:26 AM
Sunday, November 18, 2007
I have to plug the Chinatown to Chinatown bus service that runs from Boston to NYC. In fact, there are Chinatown buses that go everywhere, but this was the first route I had heard of and the first one I've used. The one-way price, just $15. Greyhound was never even close to this cheap, but they've had to reduce their prices to compete.
So the bus is clean - contrary to popular belief (I had heard the buses were dirty) and the owners were incredibly friendly.
All one way fares, with little notice
Chinatown Bus: $15 (4-5 hours)
Cheapest Amtrak price: $84 (3 1/2 hours)
Cheapest flight: $169 (1 2/3 hours)
There are tons of Chinatown bus companies, but I took Lucky Star.
Oh yea, another thing. About halfway through the ride, they pull off the highway and into this strip mall in the middle of Connecticut. I had no idea what was happening and from the looks on everyone else's face, neither did they. They ended up parking outside this enormous Chinese Buffet for us to eat/bathroom or whatever. I went to the Big Y and had a sub sandwich though since I miss real East Coast sandwiches in San Francisco. But I thought it was a riot that they did this. And a great way for them to earn some extra dough.
Posted by Lefty at 9:03 PM
Ok, so maybe this is cheating a little, since this post isn't really mine. But I can't outdo the advice I was recently given regarding the investor pitch. I called up my Entrepreneur professor from Haas and I asked him for some basic advice in terms of incorporating, raising money, etc. We ended up speaking for quite a while and he recommended I come in and pitch to some of his angel contacts. I asked him for some feedback on my pitch before I did that and he advised me to look back at an article we had read in our class last year, by Ed Harley, head of the software committee at the Keiretsu Forum. The Keiretsu Forum is one of the largest angel investor networks in the world - and so this guy has had plenty of experience and heard plenty of pitches. He said once I'd followed Ed's advice, I'd be ready...
It's a three part series: Part 1, Part 2, Part 3
Saturday, November 17, 2007
So, I have to start by saying that my company pitch right now isn't perfect. But I do know how to improve upon it. One of the reasons that it's not perfect is because I am hesitant to openly explain our technology without having proper protection. And thus, I'll have to indulge you in the process of writing, filing, and prosecuting a patent application. But that can wait.
When I began developing the pitch for the company, it sounded a lot different from what it sounds like today. And that's because part of the process is reading the reaction of the people that are listening to it. When nobody gets excited about my idea or asks me to tell them more, I know I've partially failed. The second important part is that people should absolutely and unabashedly understand the idea. Make it SIMPLE! Make it so your parents and grandparents would understand it. And that's hard when you're so immersed in what your doing.
So here's what I'd recommend as some simple rules for writing an elevator pitch. And remember, all of this should take place in 30 seconds to a few minutes.
- Explain the problem
- Explain the solution
- Make it simple
- PRACTICE - make it smooth.
- Be excited about what you're talking about and show it!
- Get the perspective of someone who knows the business you're going into (I'm using VC contacts, entrepreneur professors from school, and friends).
- Remember, you're ultimately looking for something. Know your audience and tweak accordingly, is it employees, investors, angels, parents, whatever?
Posted by Lefty at 5:04 PM
Thursday, November 15, 2007
This is probably the single most important part of your business when beginning to raise money. Sure, the exec summary and b-plan can get you in the door, but this makes it or breaks it once you're in the door. There are really two parts to a successful pitch and I'll handle each one in different posts. There's the elevator pitch, which is your 30 second - 3 minute pitch. It's the ability to generate excitement and get people to ask for more - without being verbose. It's called the elevator pitch, because you should be able to sell your idea and tell your story in about the time it takes for you to get in and out of an elevator in Silicon Valley. Keep in mind, because of the quakes, most buildings in Silicon Valley don't have a lot of floors - so the ride is quick! Then there's the investor pitch. This is when you're invited to come to the firm to present your company. You show up with a slide deck of about 15 slides and sell your company. Each one is equally important in their own respect.
Next post: elevator pitch
Posted by Lefty at 6:41 AM
Wednesday, November 7, 2007
I've already written about the merits of writing a business plan and the vague process surrounding it. So I'm going to assume that you're going to write one. This post will focus more on specific details. There are tons of business plans available for a free download and tons more that are available to view for a fee.
- Don't buy any of the following to help you write a business plan: software to help you write a business plan, business plan templates, business plan books, or anything else. It's not worth it. Unless you like throwing money away, then maybe it's worth it.
Why do I say this? Because every business plan is different. There's really no right way to do it - and seeing a bunch of different types of plans will just confuse you. There are plenty of free business plans available to view online, just do some research. Search on Google, whatever. That will give you enough of an idea of how to do it.
- It's going to take a while. You're not going to write your business plan in 1 sitting. When I first sat down to write my first business plan - which was years ago, I was overwhelmed. I even had a business plan book with templates. I tried to follow the templates. Bad idea. My business didn't even have half the things the template tried to have me do. And some of the sections were absolutely useless. I thought I'd whip that thing out in like a week. I quit that business plan before I even started.
- Ok, there are some things to do before you even begin writing that plan. Research! Google will be your best friend. You're going to be looking for a few things in doing this preliminary research. If you're expecting your business to be a disruptive technology or a new technology - know your competition or whether someone else is already doing what you want to do. It's not a bad thing to have competition, in fact, it confirms your market. But you should know what people are up to. You will also be able to tell what your market will look like, where the money is at (since that's important to investors and probably you), and generally learn a lot about what field you're researching.
The best way to research though isn't necessarily from Google. If you live near a University or business school - stop into their library and "use" them. They usually have access to Hoover's, Reuters, Edgar's Online, or a variety of other research publications that go far beyond anything you'll get through Google. They have fairly extensive research reports that are even more extensive if the company is a public company.
- Understand your audience. It's you, your early team, and investors. Your business plan is a great piece of material that helps you outline how you should be going about building your business. Make it sell too - that will help when trying to attract talent and, later on, attract investors. Many investors won't even read the whole plan, so make sure, first and foremost, it really is for you.
- Get some help from someone else. Whether it's a friend or parent, getting a different point of view and perspective can help you refine your plan. After writing my most recent business plan, I was so sick of reading the same sentences that I overlooked quite a few mistakes. Getting Rajiv in on the fun allowed it to really take shape.
- Ok, so what are the parts of the business plan that are must haves:
- Executive Summary
- Product Overview
- Market Analysis (competitive analysis, Porter's 5 forces, etc)
- Growth Strategy
- Financial Plan - I put this at the bottom on purpose. If you're a new company, with no sales or revenue, then this part is really just for fun. No VC is going to believe it and you probably shouldn't either. But it's fun to look at how much money you "could" make.
All of these components will vary in length depending on your business. There will also be additional components depending on your business. Again, there's no silver bullet. Just start writing and pretty soon things will start coming together.
- Executive Summary
I used to think writing a business plan was such a mysterious thing. After writing a few, I've realized they're not. Give it a try and shoot me questions if you have them.
Some decent links:
Entrepreneur.com - Details about different sections of the plan
BRS - Some great examples
Posted by Lefty at 8:27 PM
Tuesday, November 6, 2007
This doesn't really have anything to do with anything (except fishing) - but it's a pretty wild video. It's definitely cuz he had the rally hat on.
Anyway, off to the East Coast tomorrow for 11 days. A week in Boston and a few days in NYC.
Today we talked to a UI/Web designer that seems interested in lending us a hand. He's a long time friend - and pretty kickass at what he does. I'll send out more details as things progress.
Posted by Lefty at 11:30 PM
One of the most frustrating experiences is when people don't get your idea. Normally, this happens very early on in the process, with, well, maybe the first or second person you ask. And this is how it goes...
You - "Yo, I have this sweet idea for an ice cream glove"
Anyone else - "Um, that sucks. That's the dumbest idea I've ever heard"
And then you're bummed out for a bit and you move on. But with this idea, we didn't have the "that sucks" moment until further along. And it was actually harder to take at that point. We had already committed so much to the idea that we were quite letdown when we gave the pitch and were met with less than enthusiastic responses. "Nobody is going to use it", "How would you even get users?", "Everyone is trying to solve that problem, why is your way any better?". Yea it stung a little. And at times we'd go back to the drawing board and refine the offering. But the goals of our offering always remained the same.
What we learned from all of this is that you're never going to have an idea that everyone is going to love. But all it takes is one person who likes your idea and wants to invest in it - whether it's with money, relationships, or support. Even the ice cream glove had support.
Posted by Lefty at 2:02 PM
Here are some events going on this week in the Bay Area. Most, if not all of these events, have corresponding or sister events in other cities throughout the US and overseas.
- VC Task Force is hosting Semantic Web: Discovering Frontiers of the Next Web, tonight, but it's not free (buy tickets here)
- VC Task Force has an Elevator Pitch Roundtable tomorrow, November 7th. Ready to pitch your company to investors, this is a good place to start (buy tickets here)
- Entrepreneur College @ Wilson Sonsini on November 7th - Biotech Session: Acquiring Your Core Technology (following week - Intellectual Property) register here.
- There is a live interview with Guy Kawasaki (his blog) and Fake Steve Jobs tomorrow night, November 7th, at LinkedIn (RSVP here)
- Lunch 2.0 - Zazzle this Friday, November 9th (RSVP here). Also, Google Chicago and Google Seattle events on Friday, November 9th (announcements here)
- SF New Tech Meetup - Wednesday, November 7th - Mobile New Tech @ Mighty. Should be a pretty kickass event, with a great lineup of speakers and sponsors. Get your tickets here.
Other event websites that aren't necessarily happening this week:
Posted by Lefty at 11:49 AM
Monday, November 5, 2007
When we started developing the idea for this business, it was a great deal different from what it looks like today. I actually started thinking about this idea about 4 years ago. I moved to Bangkok in 2004 and was surprised how difficult it was for me to find people to meet, things to do, places to visit, and other things to keep me busy. Sure, most of the travel websites had good pieces of information here and there, but as a whole, it really wasn't suited to what I wanted.
I began developing a travel guide that was dedicated to Bangkok and that came from a perspective of someone who wanted to travel with an intimate knowledge of Bangkok. I wanted to offer restaurants that weren't tourist traps, sights that weren't lame, and bars where the locals actually hung out. I figured I'd begin with some of the major tourist destinations (Bangkok, Tokyo, Hong Kong, NYC, Paris, London, etc.) and go from there. I ended up going to business school later that year and shelved the idea.
Through business school, as I participated in entrepreneurship classes or met people thinking about starting their own businesses, I always gave my pitch for this travel idea. There were takers here and there, but nothing really panned out. I had actually started working on a niche travel website with a colleague from b school while on exchange in Hong Kong. Again, it just sort of died.
Rajiv and I began to play with this travel idea at the tail end of business school. He is as passionate about travel as I am and he was really frustrated when he began planning his trip to Europe post b school. He didn't know where to stay, where to visit, or what to do when he got there. We talked and began to develop an idea. The turning point was when we both reached a similar epiphany, the same day, with our idea. At that point - we knew there was something there.
After 5 months of working on the final idea - we're in a completely different place than we were when we started. Some of this came from market research, seeing what competitors were doing, and most importantly, watching the changing internet environment.
Social networking, open social, facebook, and others have all played a part in how we have morphed our initial idea into a strong offering. We hope you guys eventually feel the same way. It's going to add all of the great pieces of the internet, as it exists today, along with some age old technology. Unfortunately, we have to keep it quiet for now.
Bottom line: If you have an idea you like, be persistent and be open to change. I think a successful business is probably 60% persistence and 40% other stuff.
Sunday, November 4, 2007
This is a follow-up to the job posting I wrote about last week. I had assumed the story was over. Anyway, after the last post, I wrote an email to the company in question telling them that I had respectfully decided to look elsewhere. I told them that I felt that I had been overly accommodating. Anyway, I received an email today, a good five days after I sent them an email. They want me to come in tomorrow to meet with the CEO. I was a bit surprised, but I guess they realized the coup they were attempting. I haven't figured out how to respond, but I'll definitely keep in mind how lackadaisical their responses continue to be.
Before I came back to the Bay Area to start this company, I was in China interviewing for jobs. I decided I wanted to work internationally and China was a great place to start (economy, opportunity, upside, Olympics, etc). I got an offer from an IT outsourcing firm that I really liked in Beijing and had a very difficult time turning them down. I liked the company, the people, their business model, and the upside prospect of joining. I figured though that the timing was too perfect though for me to come back and start this company, so I did. I remained in touch with them (Ethos Technologies) and recently met with them when they were in the Bay Area.
They want to open up the US market (they are currently in the European and Japanese markets). With my relationship at Net Services Venture Group (for deal flow), who is incubating our company, Ethos's previous knowledge of me, and my interest in finding a part time job - it was really a win, win, win. So, on Friday, I accepted a part time position in business development. If you have a company or product, looking for outsourced development work, give me a shout.
Now, what to say to this other company?
Posted by Lefty at 12:42 PM
Friday, November 2, 2007
Here are my top 10 blogs that I frequent most days. They are generally tech/startup blogs, but there are a few others thrown in too. Most of these mention similar stories but often have varied takes, which gives you a good understanding of the real story.
1) Tech Crunch - this is where you want your company written up
3) Read/Write Web
4) Venture Hacks
5) Marc Andreessen's Blog
6) Venture Beat
8) Ars Technica
9) With Leather (a sports blog)
10) What Would Tyler Durden Do? (yup, my daily dose of gossip - which usually makes me feel better about myself)
1) Tech Crunch - this is where you want your company written up
3) Read/Write Web
4) Venture Hacks
5) Marc Andreessen's Blog
6) Venture Beat
8) Ars Technica
9) With Leather (a sports blog)
10) What Would Tyler Durden Do? (yup, my daily dose of gossip - which usually makes me feel better about myself)
Posted by Lefty at 12:15 AM
Thursday, November 1, 2007
I never really get bored by the views in SF (this was taken on Sunday - a beautiful day here), though there are plenty of other things that do bore me out here. One of those is the me first attitude that seems to permeate a lot of life out here. I'm not saying all of it is unfounded. The Bay Area is definitely a hotbed of intellect and technology, with great companies, schools, and people who have settled here.
So yesterday was Halloween. The only thing that really spooked me yesterday was the job offer I was given by an unnamed company here. I've been looking for a part time gig to help support me while I build this company. I'm not looking for a job that will pay me what I could get on the open market, but I'm looking for something that will be interesting, challenging, and enjoyable - and really provide a benefit to a company that could use it. I thought I found what I was looking for when I went on a few interviews last week with the company in question. I had some great conversations and was offered a job. I began the negotiations when they offered me a rate that was, let's say, on par with collecting cans for their redemption value. I have nothing against doing that for a job. In fact, I'm now considering it. But there's a difference between collecting cans and using my experience and education to help a startup develop their strategy, assist with marketing, and develop business. I'm not saying it's rocket science, but it's eventually contributing to their success and in turn, their bottom line.
So I countered with what I felt was an overly accommodating offer - because I thought that in addition to helping them, I would be getting some real world experience. I expected a bit of a negotiation and some flexibility. But there really wasn't any. Their first offer was also their last. Given the fact that I really need some financial support for the company - I was willing to do what it took - whether it was an equity exchange or some other way to make both of us happy. Nope. Didn't happen.
I called some friends and family to make sure I wasn't being stubborn - and falling into the "me first" attitude I was talking about. But even my big bro T.O. agreed. And damn, he's my biggest opponent of doing this startup and not having an income. I had to keep a little bit of pride. And so, I'll keep you posted on the job front.
Posted by Lefty at 12:35 PM