Wednesday Morning Musings... Business Books

      

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.

Acquiring a Domain Name

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.

Boston to NYC, by Bus

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.

The Investor Pitch

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

The Elevator Pitch

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.

1. Explain the problem


2. Explain the solution


3. Make it simple


4. PRACTICE - make it smooth.


5. Be excited about what you're talking about and show it!


6. Get the perspective of someone who knows the business you're going into (I'm using VC contacts, entrepreneur professors from school, and friends).


7. Remember, you're ultimately looking for something. Know your audience and tweak accordingly, is it employees, investors, angels, parents, whatever?

The Pitch!

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

How to Write a Business Plan, or really, How to Write Your First Business Plan?

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.

1. 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.
   
   
2. 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.
   
   
3. 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.
   
   
4. 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.
   
   
5. 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.
   
   
6. 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
     
   • Risks
     
   • Team
     
   • 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.
   
   
   
   

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