Most Popular
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How to stay lean and iterate quickly while you're building a two sided marketplace, especially when "network effect" and "critical mass" are the two main focuses?
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Take the market and break it down into smaller chunks. Much like Facebook did with Harvard initially, and opened it up one school at a time – you could use that same approach. It’s called the bowling pin strategy – it’s how Foursquare did it, Yelp, Craigslist, etc.
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[Philosophical] I have the idea. No, I have many ideas. I have the knowledge in tech to implement it. I love startups. Why don't I just go for it instead of waiting?
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Cause your scared. Scared about failing, what others will think about you, and not having enough resources to succeed. Listen to me … this is big. You already know everything you need to know to succeed. You just have to decide. There’s a great quote that I love that goes “Ask not if you’re worthy of your goals, ask instead, are your goals worthy of your life?”. Start today.
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what are the most crucial steps to be taken by a new tech startup when outsourcing major part of the tech to IT firms or outsourcing "product development" eg new social media website project?
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I think it’s a huge mistake to outsource technology as a startup. Near shoring development with your team (ex: your team is based in Canada / India) is cool, but not outsourcing. Outsourcing is something a big company, with a known customer / problem (that has revenue & traction) does to save cost.
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I'm a newbie just starting off with my first venture, making websites for clients. However, I am also into making ERPs and CRMs for other institutions. Would it be a good idea clubbing all the other products / services under 1 venture, because some of them are totally unrelated. Or should I launch products and a startup for each of them, focusing on only 1 product at a time? Thanks.
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I would focus on one product and set a goal to generate $1M in yearly revenue from it. Do that – nothing else but one product / company / focus and get to $1M in sales with atleast $15% net profit.
Once you’ve done that – then .. maybe .. do something else.
If you don’t focus and learn how to create a company that makes real money – you won’t create anything interesting / lasting / meaningful.
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Is there a way that I can get funding and yet keep the control of my business, without family and friends funding? If there is, where should I look at?
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Until you raise a lot of money – you shouldn’t be giving up control of your business when raising a seed round.
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How important is education when I know I want to be an entrepreneur?
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I don’t have any formal business training and I actually think it’s served me well. Instead of spending 4 years at university, I spend 4 years starting 2 internet companies that failed. I learned a bunch and eventually (on my 3rd try) it worked out.
When you start making $$$, no one will ask or care where you went to school. This doesn’t mean you don’t need to educate yourself, you just do it differently. Books, mentors, advisors, entrepreneurial friends, conferences, dinners, meetups, etc and it’s usually real time meaning you learn what you need today to solve your biggest challenges. Non of this academic stuff.
My goal is to some day get an honorary degree for kicking ass in business.
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Whats is the best way to find a co-founder for your startup?
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The same way you find a girlfriend / boyfriend. Find a location that has a target rich audience (aka Bar). Talk with them, find out if you share similar passions, work together on something small, see if there’s a fit. Ask. If you’re looking for a designer, engineer, or biz marketing guy – go to meetups / conferences that those people would go to.
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Is creating a business plan for a bootstrap style startup necessary?
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Nope. All you need to do is create a canvas http://www.businessmodelgeneration.com/downloads.php
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I have two major ideas I know will be really big. I have the vision, model and the core elements of the ideas established. I need a good reliable developer and also a mentor to help guide me through the process. How can you find and assemble a team I can trust? Should I require and NDA?
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Spend 10K on elance.com having someone build it for $20/hour. Then launch. With that live, you’ll be able to show other smart engineers and advisors that you’re willing to take some risk and build something. Also, pick 1 idea and focus 110% of your time on it.
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What are 3 things that make a startup team successful?
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- Crazy passion for the solution
- Ability to hire top talent (A+ talent)
- Persistence
The specific skillz don’t matter .. you can hire for those.
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No funding and you are trying to get exposure, you have exhausted Twitter, Facebook and a blog. What would be the next 3 strategies you would pursue? Also how affective are clean, well executed promo videos?
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I would go back to the blog – it’s the #1 ROI if done right. However, since you asked – next would be making a list of all the speakers at the events for my industry and personally reaching out to them for advice .. ensuring I also added a bunch of value to their lives.
As for videos, don’t know – I’ve never created one.
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How do I stay motivated?
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Surround yourself with motivating people. Help others stay motivated. Read great books / especially business biographies. Talk to your customers. Exercise every day – even if it’s for 20 minutes .. walk, bike, run – anything but everyday.
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What is the first step in creating an internet-based business (After planning) ? Finding a team of developers, finding funding, or beginning the creation of the site and services with whatever resources are available?
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The way I do it.
1) Get 10 people to pre-pay you for your solution 2) Build something you can show them.
You kind of want to do both at the same time.
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When opportunity knocks, is it best to jump into the game head first and learn your way around, or sit back and learn the depths of an industry before diving in?
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Dive in, especially if you’re young and only have you to take care off. There will never be a better or right time – follow your gut.
Sounds like your guts saying jump in.
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I'm part of an early startup made up of four friends, we're all motivated and really dedicated to our startup. However, one of my co-founders doesn't seem to be as motivated as the rest of us. He's supposed to be our technical lead but takes a lot of time and much pushing to get things done and easily gives excuses. That said, he has contributed a fare share to our startup so far. Do you have any advice on how best to deal with this? Thanks
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Talk to him, explain how you feel and give him options. Here’s what’s fair based on normal startups.
If it’s been less than a year – he can decide to stay and shape up – or leave and gets 0% of the company.
If it’s been more than a year – then if you feel he’s 25% of the company – then give hime ¼ of the 25% of the company + 1/36 fo the 25% for every month thereafter.
If he decides to stay and doesn’t pull his wait and it’s less than a year .. I would tell him how you guys feel .. if things don’t change – let him go and then try and find someoen to fill the void.
Don’t wait to fill the void before letting him go (but obviously get all the code / usernames / password).
Startups are fragile and just cause you were there in the beginning – that doesn’t mean anything since it takes 7-10 years on average.
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What is your advice for dealing with criticism when starting/launching a new business or coming up with an idea? Should the idea or business be kept secret?
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No, never keep it secret. The key is to ask the right people what they think – not your friends, parents or partner. The right people are potential customers – ask them if they have the problem. Don’t sell your solution, first validate that they feel the pain of the problem you’re solving. Once you’ve confirmed there is a pain, then discuss the way you think it could be solved and judge their reaction. #1 thing, don’t keep it a secret – tell the world.
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Dear Dan, when I grow up I want to be just like you. I've heard that people need to move to a 'Valley' to succeed. Is that true ? Do you really feel it's necessary ? As a fellow Canadian, what advice would you give to a first time startup guy that likes Montreal ? Thanks, Phil Up North
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Ask http://twitter.com/#!/mgingras – you don’t need to be in the valley. I built a multi-million dollar company (and sold it) from New Brunswick Canada. Radian6 just did the same thing. If you’re an Entrepreneur, you can do it from any place in the world. Just start today, cool?
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I own a website that EVERYONE gets excited about when I explain it, and then they love it when they log on.....however, people who have never heard about it go to the site and don't register, I know this is because my landing page is weak, any helpful hints to better my landing page?
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Ask your existing users this question via a survey. “How would you explain Site X to your colleagues or friends” then extract the words they use on your home page.
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What is the best advice you can give for finding a business partner? Especially if you need to quickly choose someone.
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Don’t quickly choose any business partner. That like quickly choosing a wife. Instead, find someone and work with them for a month. Do something together .. figure out a project with a goal and end date and see how that goes. Date before you get married. Just like finding a girlfriend, go to where the all the hot girls are (the best club in the city). If you’re looking for business talent – go to the business meetups. If you’re looking for technical talent – go to the dev meetups.
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What % of available time should I put into these 1.Building Product 2. Building Metrics / Usage Reports / KPI 3. Raising Angel Investment ?
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It all depends on where you’re at. Here’s my high-level approach for startups. * Product/Metrics (70%/30% time) * Get your product activation (sign-up + meaningful action) to 60% * then, Get your product retention to 20% weekly. Those are the only 2 metrics you need initially.
Once you have that, then you have traction, then spend 80% of your time raising a round (if you actually need it – longer response on why you may not). Pick a date 6 weeks out, and hustle to close on that day (close = money in the bank).
Good luck.
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What mistakes do you see people make when pitching their company?
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The number one thing (for me) is they don’t start with the Why? Why are they solving this problem. Why do they care? Why are they passionate about it?
It blows my mind how often this happens.
If it’s true that most investors care about the person, then shouldn’t the founder quickly establish why they (the person) is solving this problem, and how I can relate.
Tell me the story.
Everyone loves a good story.
P.S. A few more thoughts on startups and pitching http://www.danmartell.com/how-to-pitch-your-startup-fbfund/
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What benefit have you seen from having your blog content "dug" on Digg? Does the traffic convert?
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Using any social new site (reddit, digg, stumbleupon, etc) does 3 things. 1) creates inbound links (SEO), 2) brand awareness (Audience), 3) very small percent convert. Value in that order.
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How do I convert the phone numbers I've gotten into people actually coming into the showroom? And what do I do with all these email addresses?!
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Invite them to an event that adds value to their lives.
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I've developed a very simple work processing framework. I've done this by mashing together File Explorer and Photoshop (okay, maybe more like MS Paint). How do I go about getting feedback to determine if there is market for this application?
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Write a blog post about, give it to people (ask for an email) and then follow up and talk to them. Here are some great questions to ask: http://survey.io/survey/demo
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Is it a good/bad idea to promote the new venture (idea) on social media or other avenues (like the IdeasEconomy) very early i.e. even before making a pitch to angels or starting prototype dev? Any advice appreciated!
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Spend your time on product and building something people love. You and your team have address books. If you need early users to test with, source from that. Don’t be scared to send an email to everyone you know (and post to your personal Facebook / Twitter) to get early adopters. Press is something you should do once you know your activation / retention metrics are good.
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If you want to build an APP, but have no programming skills, where is the best place to start?
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Use http://www.elance.com/ to get an ugly/simple prototype built (< $5000) and in parallel try and find a technical co-founder. You’ll also likely need to learn how to use http://balsamiq.com/ – become a product guy.
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If you have an idea that you want to act on, how can you go about protecting it as you put together a team in the early phases? NDAs? Is it even worth trying? Or is it better to be completely open and just aim to execute the swiftest and most effectively?
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Share openly, no NDA’s (unless you have built proprietary algorithms, then use your best judgement). Sharing your idea is critical in success. You’ll learn faster and that’s the number 1 think you can do to increase your probability of success.
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How do you know if your too late with building your SaaS product? Of course there are others but the service is not widely accepted yet.
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You’re too late if someone else in the space has 40% market share and they’re doing it the exact same way you want to do it.
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What are some best practices for businesses using Twitter? We curate high quality content (3 links a day and only include our content a few times a week) and are slowly building up followers. Our goal is to build up brand presence in the space and build up trust.
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The other ways to build your twitter following is to write great content and link up your Twitter account.
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One of things that stops me from building my project is that I'm afraid that the web design company would steal my idea! To what extent could I trust web design companies?
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No one will steal your idea. If they do, who cares, get out their first before someone else launches something similar. I guarantee if your idea is any good that 3 other teams are working on it right now and will likely launch within the next 2-3 weeks. Trust me – I see it happen all the time. Focus on moving faster, not protecting it. That’s how you win.
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how do i build this kind of site for schools in my country am a web designer but am very good at using content management system (cms) joomla precisely to build a site is it adversible to use it to build this kind of site or something close
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Use Joomla
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Hi Dan, Can you share on what is your strategy in getting customers ? How did you get your first customer and what works/didn't work along the process? Thanks.
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I pick up the phone and call someone and ask for their business.
It’s that simple.
That’s how I got my first 10-50 customers .. then I learn from them and figure out other ways like paid marketing, social media and specific product flows to help get me more.
But 99% of the time I pick up the phone and explain what my solution does and see if they want to buy it.
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With the daily deal market so saturated how can I get start-ups to engage with my company and sign up for my loyalty rewards platform?
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Create something the startups want. If they don’t want it, then you can’t make me.
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Whats the most common mistake you see entrepreneurs make?
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Buy an office dog.
(kidding)
In reality, there’s a few things I see them do. – Don’t measure the amount of time they have left. (i.e. run out of time and/or money) – They don’t hire the best, it’s typically the easiest person. (friends / family). – Don’t have clarity. Specific / measurable goals.
Those are the top 3 most common.
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I want to increase conversions of my landing page but it seems like it would cost a lot to build different versions to do a/b testing?
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I like testing big changes so you avoid relative maximum for that design http://www.mathwords.com/l/local_maximum.htm – but yeah, A/B test. Also, insure that’s the right metric to be working on – improving signup conversion might be the last. Does anyone care about your product / use it / pay for it? Is it a must have, even amongst 10 users? www.survey.io first.
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Dan, I wanted to ask about employee / vendor compensation. I have heard a lower wage with a % of the company (around 3%) can be a fair number for them working at below industry wage standards, but I also don't want to load up with ownership if it comes time to go after VC. For those of us making our efforts on a show string, what would you say is best?
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The king of this is Dan Olsen at YourVersion.com – he built his startup using almost exclusively equity grants. What’s fair? It all depends.
The key though is to not grant the whole 3%, but to do it in monthly vesting or monthly allocations. So take the 3% and divide it by 48 and that’s what someone earns each month of work with you. If they leave, then you get to keep the rest. Here’s how I’ve seen early stage (pre-product) startup allocate sweat equity.
(all of these should have 4 year vestings and some with a 1 year cliff)
Co-Founders: 30-50%
Lead Engineers: 5%
Employees: 0.1 – 0.5%
Vendors: 2-5%
If you’re compensating folks you can use the numbers above with the amount you pay them. If you aren’t paying yourself, then co-founders / employees willing to take the risk shouldn’t be paid $ either.
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What are the top three most common rookie mistakes founders make when dealing with VC’s?
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1) They don’t make the problem they’re solving the investors problem. Use relevant analogies and questions to accomplish this. 2) They can’t explain why their idea is a big idea 3) They have too many slides
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easist user friendly website template site?
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Do it yourself http://www.woothemes.com/ .. hosted, either http://www.weebly.com/ http://www.webs.com/ or http://www.squarespace.com/
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Is it okay to name my company something weird if it's the only way I can get the exact domain?
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No. Naming is becoming so much more important as the internet gets cluttered. It’s unfortunate, but I discredit startups with weird / bad domain names. That being said .. getdropbox.com, connectedhq.com, etc are o.k.
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My startup is SocialLinks.co which aim to make hyperlinks more effective, informative, social and engaging to the users. The initial response is amazing and people like to embed it on their websites. What is the best way to market and reach out larger audience?
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I love the idea and have talked to others about it – so that’s good. Getting press always helps and trying to figure out how to have your users promote it for you. Sorry, wish I could be more specific but this question would require 2 hours to properly lay it out.
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How do you define the "Activation" metric? Is it just use of a key feature or is it a somewhat engaged user on their first visit (use multiple features)?
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I measure using weekly cohort and I look at accounts that accomplish a certain behavior. Signed up and took a meaningful action (clicked a search result, shared a tweet, invite 5 friends, etc).
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What's the best way to START a conversation about funding with a potential investor assuming that I either know this person or can get an intro. Do you always ask for advice (in which case, on what? On your deck, or your business?), or do you sometimes directly state that you're raising money? Thanks!
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Try and get an introduction from someone they’ve invested in previously. The best approach is to ask for advice on timing of the raise “just want to know if we have what it takes to raise, or what numbers / traction we should aim for” – that usually does it.
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I am a rich guy and want to invest in tech. Can you suggest a company for my money. I'm new to investing.
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Nope.
You can find companies on http://Angel.co
Just cause you have money doesn’t mean anyone wants it.
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Is it possible to find a engineer/co-founder who is a jack of all trades? PHP, MySQL, iPhone apps, HTML 5, Flash, etc... and if so, where?
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Yes.
Search GitHub.com for someone who’s contributed code in each of the respective programming languages.
Good luck.
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HI Dan, WE are a small tech start-up in the music business and we need to find a tech person who knows meta-tagging, any suggestions of where to find that expert? Elise
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I don’t understand fully understand your question, but the way I find anyone with an expertise is … find someone current doing the job (google search) then ask them who are the 2 other people they admire in the industry. Keep doing that till you find your person.
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Do you ever stop?
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Can’t stop, won’t stop. It’s part of my DNA .. I’m intense and I like moving fast. I’m happiest when I’m working with super smart people and building features that users love. I’m addicted to creating value. Also, I’m unapologetic for it. I am who I am.
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What do the experts foresee within Web 4.0?
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It’ll be accessible via a computer chip in our brain.
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Is there a trick to building facebook ads that people actually click on?
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If you want a click, then use www.compfight.com to search for a girl that is “interesting” to look at. You’ll get clicks because people want to see the bigger version. You wanted clicks – didn’t say anything about qualified traffic.
Here’s how I break it down re: % that it matters to get it right. * Image is 70% – make it relevant but interesting. Faces, Interesting Objects, Etc * Title is 20% – Questions, Strong benefit to the user (Get rich in 10 days ;) * Body is 10% – Clear reinforcement of the benefit and commitment.
My friend dk wrote a great how to here: http://www.johnchow.com/affiliate-summit-west-2010-killer-facebook-advertising-tactics/
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I have a startup and I constantly have problems figuring out the best way to document and process my longterm goals. I almost feel like I need a PMP. How do you organize your thoughts for longterm thinking/planning? note: short term (2-3weeks out is easy as most things are actionable immediately but on the bigger longer-term things I want to document and scratch out thoughts and not loose track of them as I do with notebook scribbles.
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I put em' on my wall in front of me. The most I’ll plan for my startup is 9 months and 10 years. 10 years is a no brainer – world changing app w/ 80% of our target marketing using us. 9 months is different. I then break it out into a concreate 3 months w/ metric goals, with the following 6 months more high-level ideas. Both the 3 months and 9 months have concrete goals around product metrics, monetization, funding, etc. I like pictures so I draw it out in Omnigraffle and annotate it.
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I will be launching a new site that connects buyers and sellers. My main concern is how do I pre-launch my site when I am targeting to seperate demographics, the (Merchant, and the Consumer?) Thanks for your help
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In any double sided market you’ll need to subsidize one of them. Ex: If you’re a dating site, you’ll like have to make it free for women (and use paid marketing to get them there). Figure that out, then try and attract them. You might also want to learn from others who’ve accomplished this and follow in their footsteps.
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Next week, I will be presenting the idea that I'm working on to someone who might be a potential customer. At this stage I have a working prototype however it's still not perfect, yet I'm very interested in as many feedbacks as possible. Naturally, I'm interested to get feedback on the features, value proposition and also will they be willing to pay... Can you suggest some questions that I should ask the potential client Thank you.
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If the application isn’t polished and you’re trying to get a sale, then try creating some high fidelity mock ups and asking for a deposit. If your goal is to validate the problem and learn, then don’t go in there to pitch, but ask open ended question about their problem surrounding your solution. My favorite is the IPO question – “If you could wave a magic wand and the solution was built, what would it look like and how would it work?”. Then just listen.
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Hello Dan, I am about to start a Web Development company in Mexico focused on solving Small and Medium Business day to day operations, which Business Model do you think is best?' - Develop one big application for several companies in one industry and charge subscriptions?' (faster, cheaper) - Develop each company a specific application for its needs and charge for the entire app?' (slower, expensive)
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Build as little as possible that a customer will pay for. Focus on a niche customer type that you feel have the problem the most and that there’s enough of them (ex: accountants). Once you nail the solution for them, expand to other small businesses. If you’re charging $10-$90 month then your customers are likely independent professional / consultants / developers .. if you’re focusing on lawyers / doctors / etc – then charge $250/month (cause it’ll cost you that +++ to acquire them, they don’t typically self serve).
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i want to start my own clothing store/line/website. where do i start? how do i find the companys to help me?
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The platform – use http://www.magentocommerce.com/
I don’t know much more cause I’ve never created that type of company.
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What are the limits for the amount of ownership someone should trade for the first round of funding?
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I don’t think any investor should want to take more than 35% (avg is 20-25%) because if there’s multiple rounds of funding, you want the entrepreneur to be invested in this long term with enough meat on the bone.
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What are the best ways to approach Angel investors and VCs?
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Get an introduction from an entrepreneur that they’ve invested in. Connect with those entrepreneurs early and ask for advice on your startup.
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What do you look for in companies you may invest in?
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It’s never one thing – but here’s what I like to see. – Product, launched with users. – Thoughts on how they’ll make money. – Ability to clearly communicate. – Domain expertise
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Where do you draw the line between satisfying customer feature requests and overbuilding the product?
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I don’t focus on satisfying customer feature request, I focus on solving a problem and using the customers feedback (in aggregate form) to give me clues into how I should do this. If I get it right, I’m rewarded with time & money, if I don’t – I try again.
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Hi Dan, How much research do you do on a product/service idea before taking the plunge? I've got an decent idea, but want to make sure nobody else is doing it before diving in because it is labor intensive (lots of data gathering etc.) to build the mvp. Thanks!
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I try and validate the idea using the customer development process created by Steve Blank. This means trying to find potential customers and validating the idea with them. If you have competition, the potential customer will tell you this. Also, competition is good. I like to pre-sell the idea before building anything. Get $$ for it up front, then go build it.
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What are the keys to effective email marketing?
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- Permission: Double opt-in and be sure your subscribers know what they are getting into.
- Consistency: don’t send an update today, then in 6 weeks, then a week later.
- Content: Insure the content is value add and helpful – not always self promotional.
- Segmentation: Send the right information to the right people.
and remember – “Permission is perishable”. Gail / CEO of ConstantContact
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I'm trying to start a career-help website for Northwestern Students. I'm not getting a lot of feedback. What's my next step? My vision is to create a site where Northwestern students can get resources via articles, guides, links etc. and can also voice their opinons of how to improve the university career services site. The current site is <a href="http://www.wix.com/purplecareerreview/northwestern">www.wix.com/purplecareerreview/northwestern</a> I appreciate any help and advice. Thanks!
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The way I would fix this is talk to 10 students, put the site in front of them and ask them what they think.
You’ve got a lot of information on the site, but does it easily solve a problem? I don’t know. Ask the students.
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What are your three to five best tips for being productive throughout the day? How do you stay focused?
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- Exercise
- Write (pen/paper) down your big rocks (things that move the needle)
- Do those things first
- Mornings are paperwork / code
- Afternoons calls / meetings
- Batch email processing
- Say no to distractions
- Break big projects into 1.5 hour chunks
my2cents
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Are Google ad words a good place to spend money?
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The best place to spend money is where your cost per customer is less than the lifetime value of that customer. I’ve been spending more time on Facebook, AdMob & LinkedIn lately.
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How was the first year of running your business? How did you manage your time to make sure you were not over working yourself? Since I started working on my startup, my blood pressure has gone up!
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The first year is intense. It’s major ups & downs (like crazy ups and downs). It’s normal to be feeling this way – just keep pushing forward. I’ve learned that I need to exercise and keep my body healthy no matter what. You might want to try doing more of that. No excuses, find an hour a day to exercise. All the best.
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Hi Dan, I know this is a big question/multiple parts and really appreciate your time: how can my startup generate noise quickly - we've been heads down for a couple months & just put out a beta version of our webapp/iPhone app (yeah), the only problem is we haven't been doing any (social)media outreach in parellel (rookie mistake). No Launchrock page, no articles/blog post written about us, no momentum. Thank You!
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The best way is to make a list of all the press outlets that write about companies like yours and approach the writers directly. Create a story worth talking about … something more compelling than just “launching”. Maybe it’s how you started, found your team, the “Why” you’re ding it, etc. They need a story. You can also use this approach to talk w/ speakers and bloggers. There’s no quick fix, it takestime – so start today and reach out to 2-5 people per day. Make it personal, don’t copy / paste.
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How does startup company attract people to join? With limited funding, startups can't afford to hire many full time employees on a purely salary basis. So how do we attract talented people? How to convince them?
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Your product / site has to rock. Something awesome / beautiful and inspiring will go a long way – so be very thoughtful in how your public identity is portrayed.
At the end of the day, people want to work for a company where they’ll learn, have the ability to make and impact and work on a solution that will change the world. They typically buy into the vision – not the salary.
You need to have passion and be able to explain yourself clearly.
Tell em' “Why” you’re doing this – shouldn’t be about $$$$ – be honest / raw / real.
Hope that helps.
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Hi Dan, what does lean startup methodology mean?
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It’s a methodology of learning based on lean manufacturing pioneered by Toyota.
It doesn’t mean cheap or bootstrapping.
It’s about focusing on the right things at the right time and learning in a validated way.
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Do you think we'll see the same embracing of seed & super seed investing up in Canada as in the US? Also, how do you suggest I respond when the Cdn VCs or angel investors I speak with ask me to send them my business plan?
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It all comes down to the market.
Super Angels are awesome because they typically don’t take fees, they get paid when their investors get paid. Also, they typically have different terms then VC’s that are more entrepreneurial friendly.
Without the market of investors fighting for entrepreneurs (doesn’t exist in Canada), the VC’s (for now) will continue to exist. If someone replicates the Super Angel concept in Canada – they’ll dominate all deal flow.
re: Business plans – I think they’re stupid. However, if you need to raise (esp in Canada) then you’ll need one. Alternatively, you could hustle, get crazy traction then you wouldn’t need a business plan. At the end of the day, if one of my top investors asked me for an oil painting, he gets an oil painting – it’s all about getting funded to continue forward.
MoneyInTheBank
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My sales strategy includes, direct sales by sales execs to consumers (home users), also via vendors and to cover a broad region I have distributors to reach more vendors. In addition to this I have a tele marketing team that gets to more customers and vendors. Is there any modification I need to make to this plan?
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Yep, I would change the wording to “guess” vs. “plan” – cause that’s all they are. Having some ideas to test is more realistic and then run through them. If you haven’t tried any of these yet, then they’re really just a guess. I guess and test 2-3 new marketing channels a month – most of them don’t back out ($$ ROI) but the ones that do give us an edge.
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I am planning to setup an Android Application Development startup, do you think it is a good idea or its too late and there are too many players in the market
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Competition is a great thing – it means there’s a market. If you think you can position your company with a unique selling proposition to stand out and be different, then I say go for it. Just make sure you spend time answering the question “How are you different” and don’t say because were cheaper – very bad.
Methodology
Development process
Marketing support
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Should I offer free "trial" periods for my product?
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Free trials periods are a business model decision. My general advice would be, if you’re product cost $250/month or more, have them fill out a form and contact them directly to bring them along the sales cycle. If you’re in the $35 – $150/month range – and your product rocks – then a 7-14 day trial might work.
However, if your per user cost are fractions of a penny, then you might want to consider freemium as it can allow you to acquire users cheaper due to word of mouth marketing. Maybe only 1-3% of those users pay, but they will bring other users and customers with them.
The key in a freemium model is that your free product & paid version have to be at product market fit to really work well.
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How should I decide if VC is right for my company?
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Do you have a vision to build a company that can/will generate $100M+ in revenue within the next 7-10 years. If that’s the case, then that’ll likely require capital. If you don’t, don’t raise VC.
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Hi Dan! What's the difference between a prototype, MVP, and alpha? Thanks!
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Prototype is anything that you can demo. This can be paper, html screens that have clicks wired up, or even a flash prototype.
MVP is a working app that has a unique feature that starts to demonstrate the value of the app.
Alpha is usually done as a closed release, meaning new accounts are slowly brought in to test out more features and iterate towards a public release.
Personally, I like to an app in 2-3 weeks and make it public. I don’t do consider anything one or the other .. I just put it out and iterate daily working to move my metrics in a positive directly.
Hope you’re having an awesome day!
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How much equity do I need to give to someone who is coming in late in the game with $250,000.00 - we've launched and already have two other investors that have invested $500,000.00 immediately.
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That all depend on your valuation. General rule of thumb is 25% per raise you give to the investors. So assuming you already gave that to the early investors, and the new investors coming in later – maybe 10%. Again, all depending on valuation and timing/traction.
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What are your thoughts on Social Hooks during sign up process. We currently have one once they finish the sign up process, but we are thinking of having one in the beginning too, but not sure. What do you think?
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Social hooks are best when they’re inline with your product. Signup processes (unless it’s a social network or you have a compelling reason to invite someone) don’t really benefit. I have used social hooks as a way to social proof a landing page. Focus on the core product and retention. Don’t get too caught up in gimmicks that don’t move the needle until your other metrics are solid.
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Hello Dan, I'm proficient in various technologies such as programming, website design, or anything dealing with a computer and have tried creating several businesses in the past 5 or so years, but with very little success. I've been unemployed for the duration from layoffs and have a difficult time finding work due to now bad credit from bankruptcy, lack of references, employment gap, etc. With no social network/money, what forms of marketing would you suggest to get started?
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The best marketing is your users. Focus 110% of your time building something worthy of talking about. With that being said, the only “free” marketing is Press, SEO and Social Media. To get press you need to be newsworthy – try and find an angle for the writers to write about. SEO takes time, so start blogging. Social Media usually means sharing great content for your customers and engaging withthem. There’s no silver bullet. Good luck.
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I filed for a business name in my city. I wanted to possibly start a number of businesses under one name such Pop-up shoes, pop-up clothing, pop-up errand service for example. Would I have to get a license for each business or would it better for me to have Pop-up as a corporation and then have all the other businesses fall under name or corporation.
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Talk to your lawyer.
Personally, I would just start and see if anyone cares / minds. ;)
That’s just my style
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I really like your recent response to the question of one having fears about starting up. But as someone who is in the tail end of a failing business/ start up, what advice can you give to young entrepreneurs in terms making the right decisions to push on instead of going down the path of the proverbial snowball effect of doom, gloom and possible depression. In essence, what are your strategies for dealing with failure and moving on?
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If you just failed, the best thing you can do is …
- Surround yourself with friends that are doing awesome. If you don’t have any, make new friends.
- Go to the gym and workout, it’ll make you happier.
- Start making a list of all the problems you have and ways they could be fixed.
- Go listen to smart people speak and allow yourself to be inspired.
- Read biographies of people you admire in business.
Doing that will bring you back up.
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What's wrong with advertising as a business model?
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Nothing.
There’s 2 way people reward you for building a great site. Either money $ or time.
If you focus on increasing engagement (time on site) and visitors (uniques) then you’ll do fine.
One more piece of advice that I recently heard from @jason is to insure you create a site that has high CPM’s. No point in build a generic content site / social network), when for the same effort you could pick a high paying category.
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The minimum viable product is launched, now how do I get users and feedback moving? I've had minimal success with social media.
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Email everyone you know – everyone … send them something simple / short and sincere. That’ll get you some users .. from there – talk to the ones who’ve signed up and try and learn if you’ve solve a problem. Also, recommend reading this: http://davidcancel.com/data-driven-startups/
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What are the steps to an effective onboarding process?
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Try and add value before you ask for signup. This shows them that there’s real substance (ex: http://timely.flowtown.com – we provide a free study). Then you’ll want to figure out the single path a user should follow to get to gratification – meaning they’ve felt value. Whatever that is, build a wizard that walks them towards that goal – nothing else matters. Don’t try and show off, highlighting all the geeky stuff you offer, just get them to some level of gratification and make sure they keep coming back to learn about the other stuff.
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How can I find a good sales person?
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Read the book the Ultimate Sales Machine, Chet Holmes goes through the steps and process. It’s what I’ve used to hire any sales person.
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as many successful companies have started due to a need for themselves, what is the best way to implement one's curiosity into a successful business?
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If your curiosity is also a problem you’re having and you haven’t found a solution, then just build the minimum amount to solve it – then share that with 10 of your friends. The key is to find others that may have the same problem as you had, show them your solution and see if they would $ it? That’s how www.square.com / www.twitter.com were started (both by Jack Dorsey). He spent less than a month building a prototype for each and then showed it to his friends.
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How do you feel about incubators? We just applied to every incubator we could find. It took a couple of weeks to do all the work, make all the videos, build demo sites, etc. In that same time I could have added a few new features and been out talking to customers. Are they really worth it? Especially given today's funding environment?
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I’m bullish on techstars and y-combinator due to the network you get plugged into. If you live in a city outside of the valley, then I also think it’s a good idea. All and all, hanging out with a bunch of other crazy entrepreneurs for 3 months is a great thing.
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I have a fairly well developed company (<a href="http://www.thrillsleds.com">www.thrillsleds.com</a>) I started when I was 14 with our product and business model in place, however funding has dried up. Current investors have pulled the plug until they see some type of progress, an improved management team, perhaps new investors as a vote of confidence. How can we move the company forward with no $? Or, perhaps generate awareness in order to raise more $? Its such a fun and cool idea, we cant allow it to sit idle much longer.
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Simple. Sales. It seems the product it well thought out .. you should know your ideal customer type. The only thing you need to do is sit on a phone for 30 days trying to get people to buy it. Spends some times understanding your most successful customer, how much $$$ are they making and what made them buy from you. Then just present those case studies. People buy into the dream, sell the dream.
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Initial developer: partner or hired?
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Contract maybe, and build the first prototype. There’s no formula however I do know … the more you build before you need to hire / partner, the more equity you can keep. Co-founders are the highest form of dilution to a business.
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What is a good way to start a personal training business? I also plan on owning my own gym
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Find a park and get customer to pay you to train them there … no cost to get going and you start to build your customer base.
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Tim Ferris once said he ensures the entrepreneurs he invests has back up plan i.e. they have MBA , savings etc so if it fails they would be hit hard. What are the things an entrepreneurs can ensure so they can have better back up.
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I could care less if they have a backup plan. There’s no plan B .. there’s Plan A, then if that fails – there’s another Plan A.
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Do you think the independent music market is strong enough to build a pandora/spotify-esque website solely for that market?
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It’s an issue of “Innovators Dilemma”. I’m sure they’re capable but they probably don’t have the balls or motivation to do so.
An independent company focused on 1 specific thing will always do better than the big guys.
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What is the best way to find a team to help you deliver your idea? I have no-one in my close network who is suitable so simply doing that won't work. Are there any forums or websites to trawl?
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If you’ve got a bit of money, use http://www.elance.com/ to get something going fast.
The other way is “hiring” a consultant, but negotiating payment upon success of your company. If you hit onto something great, you might find yourself a co-founder.
For me, I believe in finding the best people who’ve already solved the specific problem I’m solving, and asking them. Once I create a list of 25 people per specific area of expertise, I figure out how to get a warm intro, then persuade them to join my team.
You need to learn how to sell.
If you can’t, no one will do it for you.
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Many say that to be in a startup, a "jack of all trades" is pretty much a requirement, but do you think that's actually the case with people in startups, or most people simply think they are capable of everything but really aren't?
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I think they’re good enough at most things .. if anything, they’re willing to do the work, even if they suck at it. That’s probably the most important thing. The beauty of startup life is JIT (just in time) learning.
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Whats the best way to market on a tiny budget?
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If you have any $, try Facebook ads. For $5 / day – you can actually get 8-10 clicks from qualified users. If you have $0 money, then create great content. The trick is to talk about the problem your solving, not your company. Ex: If you sell houses, don’t talk about your homes, talk about the industry, how to get mortgage approvals, etc. Content marketing is “free” and VERY effective. It’s how we get most of our users http://www.flowtown.com/blog
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When is the right time to launch?
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Yesterday.
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What are the best resources available to prepare my start up pitch to investors?
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Angellist
Dave McClurre Prez on VC Viagra
Travis Kalanick post on Raising Skillz
Tim Young blog post on 5 dec slide
Google for the links.
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Dan, thanks for the response! My question now is, sure we can sell sleds, but to whom. Our target customer has been mountain resorts, not general public, to buy a fleet of 10+ sleds to run guided tours.. This has presented a problem of the decision makers at resorts balking on spending 50K+ on an unproven idea, although we did a beta test around 2000 with 3 mountains that went well. So, do we focus on mountain resorts or retail customers. Im open to selling to both, but which to focus on?
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That’s your call. Either way, it’s a sales thing. Selling retail sounds way tougher and requires selling to distributors. Mountain resorts are identifiable and there’s only X amount. I like focused efforts. Spend 30 days on the phone selling to resorts – if no one bites, then try retailers. If you can’t sell any – then maybe you should do another company / do something different. There is opportunity cost that should always be considered.
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Three years into the growth of a successful company and my partner is slacking off....he is not completing tasks, appears distracted and is losing credibility with our employees. And every time I bring it up, it denies it and tells me that I am being too controlling. What do I do?
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If you have specific company goals that you’ve both agreed upon then his performance should be clear. Start there .. that’ll provide him with the rope, if he decides to hang himself – that’s his call. If that occurs, then ask him what it would take to buy him out.
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Is there a magic number that you have when deciding when to make changes to customer request? Basically, do you wait for 20% of your users to mention the request, etc.?
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There’s no magic number, it’s all gut. I’m always a user of the product so I use my own needs, metrics we are trying to move and strategic decisions in regards to product roadmap. You should be trying to improve retention and activation, so figure out what features will help move those metrics.
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What are some good events to go to for business just starting up looking for investors?
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Growconf, TechCrunch Disrupt, etc
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I'm looking to raise a small amount of funding from my close network ($50,000 -100,000). Do I need to hire a lawyer to draft the investment agreements for loans or equity? Or are there sufficient templates out there to use?
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Yes, get a lawyer but have him do something simple – i.e. Convertable Note. Should cost no more than $1000 for this document then you can manage things from there.
If you find a great startup lawyer, they usually do deferred fees so that it doesn’t cost you anything until you raise your Series A or get acquired.
If you’re only raising $50K then using online template might be good enough for now .. if you raise more in the future you might have to spend a few dollars to fix things but those are high quality problems.
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Hello, I'm trying to put the lean startup methodology into practice, does this mean I create a simple MVP first then go out and talk to customers about it and/or how to improve it, so as to test my hypothesis and iterate. Or, do I first talk to customers directly about my idea then build according to the continuous feedback? I'm more of a programmer and tend to like to build ideas quick and dirty first.
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Talk to customer first and get them to give you money for an early prototype – get 10 customers to do that.
Lean Startup is about validating the riskiest assumption you have. If you know how to build it, then that’s not risky. Assuming anyone wants the solution is risky – go out there and talk to customer – then ask for money $$$.
Trust me – that’s the most important.
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Dan: If entrepreneur's have a great idea is there a place where they can go to bounce their idea off of a professional entrepreneur or one that has many experiences, like yourself or other veterans? Many entrepreneurs are in fear of their product/service or internet based concept getting stolen but could use the advice and mentor ship of people like you. Thanks and have a great day! J
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It’s best to go to where the entrepreneurs hang out. If you don’t know where, ask them for your specific city.
- Startup events (TechCrunch Disrupt)
- Business organizations (YEO)
Don’t worry about anyone steeling your idea.
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What skill/persona does your company need the most at this time?
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A+ engineering talent. We have a rule to continue hiring smarter people than the last .. it really keeps the bar high and recruiting extremely hard ;–) but worth it.
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How do you know when you've achieved product/market fit?
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Survey them using www.survey.io and if 40%+ answer “Very disappointed” to the “How would you feel if you could no longer use [Name] App?” – then your there. The trick is to only survey users that have been “gratified” – meaning you expose them to the feature you hope they would like. Don’t survey users that didn’t activate, etc. Also, best to do it in 2 week cohorts, so you can see if you’re getting better (assuming your app is changing weekly).
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How many investors are too many?
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I think 6-8 is a good number. Typically it goes one lead: $200K+, couple medium pro’s: $50-$100K, then strategic guys at $25K (sometimes $10K for ultra strategic / domain expertise / distribution / etc). I do know folks with 60 investors, and although it’s not optimal, they still got their funding raised – and that’s #1. If you’re oversubscribed – congrats – not typically the case.
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I have a prototype of a product complete but need to drive some initial beta traffic. What is the fastest way to attract testers to the site? Also what are the best tools to use for gathering and encouraging user feedback?
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I like using Facebook because it’s relatively cheap. You do need to test a lot of the ads for copy and image, but you can usually get a visit for 60c. Once you get signups (be sure to get emails) use www.survey.io – typically 25% response rate. Send the survey 7 days after they signup.
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Dan. Thanks so much btw. This is an awesome service. I have a start-up concept. purchased the website, etc, but it will require ALOT of programming of the UI and the data gathering will be huge. How can I raise $ with just an idea. If I dont raise the right amount of $ and start slowly, somebody bigger will jump in a take the market. Are there people out there that will just invest in a great idea, perhaps even become part of the start-up? If so, where to find them?
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No investor I know will give you money for an idea. Also, your belief that someone bigger will jump and take the market is likely false. What might be true is 3 other guys are having the exact same idea right now and it’ll be an execution thing. Ideas are worth anything – it’s all about executing. Build the simplest version of the idea and see if anyone thinks its cool. Do the scrapping manually at first if need be. Move fast.
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What methods would you recommend to test a product/service (to see if its profitable) in real word (not online) without spending money for the testing? The goal is to run 100 ideas through the 'test system process' to find a few probable income producers...
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Go find potential customers and try and sell them the solution. Product just enough visual assets to sell it. If they like it, then ask for a deposit ($20+) and see if anyone bits. That’s the best way.
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What problems to you see with companies like sponsoredtweets.com? If none, what do you think they can do to improve their experience?
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I think advertising and intent have to be aligned. SponsoredTweets doesn’t work for me and never has.
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How important is a college degree to the entrepreneur? Would a degree affect capital raising and other aspects of business? Or is it just the shine on a shoe?
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Shine on a shoe.
Investors invest in great companies, with great ideas and great teams.
Now, if you went to Standfard / Harvard / etc .. then yeah, shine on the shoe, but that all goes out the window if you have real revenues or crazy traction / growth that moving up and to the right.
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What do you think of the Groupon Model? Where do you think the internet is taking us for the future? Thank again!
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I love Groupon (especially Andrew the founder). As for their model, I think you’ll see it evolve over time. They just recently release personalization which is just the begining.
The future is going to be hyper personalized and targeted. I’m not in the e-commerce space, but when I see things like Zappos tagging users as they browse products and then retarget them with ads when their on the new york time, I think “Damn, that’s cool”.
It’ll eventually happen in the real world – think minority report.
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Some suggest that "sustainable innovation" is part of a few things that investors look for in a business. In my case, I see an opportunity with a sizeable market where all the incumbents aren't innovating a single bit. I can't offer any amazing technology or IP, but I can solve a few problems by just doing it "right", and not the way it's being forced on people right now. How do you think investors might react to a solution to a problem that hasn't been implemented, but easy to replicate?
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It sounds like your still at the idea phase .. for most seed investments, investors will put more stock in the person and the traction they get with the resources at hand. If you think you have something – go .. but don’t expect someone to give you money for the idea, those days are gone. #traction
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How can I manage a great private beta?
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Get your new signups on the phone to learn. Focus on an admin activity stream that shows you what actions your users are taking (or not) and insure it’s all about activation and retention.
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I'm in the process of bringing on a tech co-founder, what questions should be asked before bringing on someone?!
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Work with them first. Spend at least a month or two working together to see if it’s a good fit. The #1 killer for most startups is team disagreements, especially amongst co-founders. It’s like having a baby together – treat it with the same decision process.
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We (QuoteRobot) are a "ramen profitable" startup in Canada. How can we attract attention from investors and press in silicon valley without moving there?
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You can’t. Most investors don’t like to invest 2 hour (flight) from where they’re based and it’s for good reason. The value they add (other than $$) is their network. It’s best to raise from the area you live to benefit from that.
My friends at Attachment.me (Toronto) recently did it, but they came down here and hustled .. and are moving. http://www.foundrygroup.com/wp/2011/03/foundry-group-invests-in-attachments-me/
So, yeah – raise locally if you can .. if you’re ramen profitable, then all you should need is $$ for marketing – friends & family is the best route. Don’t raise unless you need to.
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Hi Dan, in regards to the last comment once you have an awesome product and great content what do you suggest give the best ROI ?
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I think this video would help you best .. talk I gave on social marketing for startups (top right) http://www.udemy.com/social-marketing-for-startups/
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Thanks alot!. I know what Ill be doing for the next 30 days! The great thing is, in 2007, we visited 75+ resorts for a demo tour, and have many leads I can follow up on. Initially we had a different business model (an entire venue, track design, sleds, etc for $1 million+) which made it hard to sell. Now our biz model is lighter, more flexible. Lastly, I dont want to give up on this company! Its my baby! (whining voice). Id hate to have to move on to other ventures.
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Listen to the market. Whatever they tell you – take it – and try and solve for their needs. It’s not about you .. it’s about them. Use their words, language, concerns and you’ll do fine.
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How can I get startups to begin using our daily deal site?
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List a great deal. Daily deals sites are only as good as tomorrow deal. Simple.
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When starting a new venture, esp one in concept phase should you be drawing a salary? If so much should you take out? I think to survive one should build in something to the plan. Please comment.
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If you’ve raised seed funding then you should pay yourself enough to live but not enough save anything. If you’ve raised a series A, then pay yourself market rate. I personally only take salary once there’s profits.
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We're launching DuoDater, a site that makes online dating less awkward and more social with double dates. What's the best ways to acquire our first 10K users?
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Work on a press launch and ensure you get in front of the right bloggers and writers before you launch. This should be done by the founders of the company – and be sure to pitch a “story” not just the launch. Why are you different, How are you going to change the dating world, etc. Make a list of 100 media outlets with the corresponding writer, email, info, etc – then start making calls / emails. Don’t blast them a form email – make it personal and short.
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I'm a web designer but I need to find a dependable software developer to team with. Would I be better off working with someone I can trust, who I've known for a few years, and is adequate at programming, OR finding the best software programmer available, and paying a lot more money to someone I don't know at all for the best skills?
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Hire the person you know for now and keep looking. Maybe by the time you find that great person, you’ll have a need for 2. If not, do what’s right for your business … it may mean keeping your friend or not.
The key is not to wait .. start now and build/fix while in flight.
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What's your advice for becoming a better sales person?
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Everyday for a week, anytime you buy something ask for a discount. No matter what .. Starbucks, mechanic, utility bills, go for the ask.
You’ll get over your fear of rejection asap, and that’s sales.
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I am a Sophomore art student attending Columbus College of Art & Design for Industrial Design. I have started my own business custom painting wrestling headgear and designing sports gear for wrestling teams. School is very demanding an I have orders coming in from all across the country. Any time management suggestions?
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Start your day by writing out the “big rocks” – the things that will move the needle the most for your business. Do those (usually 2-3 things), everything else comes next. Also, I use a virtual assistant – she saves me a lot of “busy” work.
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How much information can you reasonably ask for in a sign-up process?
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Whatever you want but it’ll definitely effect conversions. Ask for what you need to learn – and feel free to change that information over time to learn new things or make the process easier for new users.
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How should you go about optimizing your pricing once you have a freemium product which some people are paying for?
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Measure in weekly cohorts you upgrade percent to paid. If you’ve got something good, it should fall in the 1.5-2% range. From there, you can increase your pricing for a week and see if it changes your upgrade metrics and most importantly your monthly churn %. If you’re getting 2% upgrade to paid, but 15% monthly churn, then you need to spend more time on the Pro features to insure the cost benefit is there.
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How can I lower my apps churn rate?
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- Qualified traffic
- Increase your activation rate (get them to a sticking / integrated point)
- Add more value
- Lifecycle messaging
- Call them as part of your on-boarding
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Hey Dan, I was at your presentation in San Francisco, and you called that 1.7 customer acquisition, like Launchrock, you called that something, what was that again? Looping referrals or something?
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Social amplification.
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Awesome. Youre the man. Next is the concern of building our UI, site programming, data mining, etc. How do to THAT w/ a very tight budget? Offer equity to a programmer? Hire an outside firm to do it? Or start a wordpress site and do it myself? Eventually it will be a large social networking site if all goes well but I dont want users to begin to use it, and then we have an issue with maintaining content, handling traffic etc and then they lose interest. I DONT want to fizzle out and die.
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The only way to fizzle out and die is when you stop improving. As long as you keep iterating (we push code to prod daily, with weekly feature releases) your early users will come back. If they don’t, then that’s cool (since you’re going after a huge market). Build something and launch within 30 days. Trust me. Something real in front of users will help you learn faster. Learning is the killer app – not your idea.
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I started a company Magjul(R) in 2007, after i got few request for covert surveillance systems from individuals overseas, i subsequently ventured into the conventional security systems, as a system Integrator for Sony(R) Pro Solutions, as their dealer. I did over $12,000 USD in sales in the Q1 of 2011, i'm being outweighed by the demand, i feel the time has come for me to get few investors onboard. Please, where do i start? the overseas business is a $billion security market. Regads! Eric
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If you need working capital then talk to a bank. If you want equity investors than build a 10 slide deck with a 100M projections in 7 years that makes sense and hit your local investor or jump on a plan and visit Sand Hill Rd.
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What's the right answer to someone when they ask you, "why are you doing a startup?" Whenever I say, "to make money" they say, "you don't need money." So, what should I say instead?
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To change the world. Solve a problem the way you see it. Making money is only a proxy to validate how much value you’ve created.
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How can you launch a business with as much publicity as possible? And, what are key criteria for attracting as much brand advocates as possible?
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Create something interesting and unique and personally reach out to as many press outlets as you can (not doing a press release – personally). If you build a great product and communicate with your users you’ll create brand advocates.
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Hey Dan - We're going to be launching a new iPhone app that is geared towards the outdoor lifestyle and people who ski, snowboard, mt bike, road ride, etc. (expensive gear). The app aims to provide an easy registration/documentation tool and if something is stolen, the user can submit an alert that is broadcast locally and via social sharing. We're thinking of launching it for $1.99 taking into consideration many of us have a lot of high $ gear! Thoughts on app price for release? Thanks!
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You can always change the pricing to meet demand and optimize for pricing yield. $1.99 seems fair but you may want to keep an eye on it.
Another strategy you can use monthly is to do an exclusive 6 hour window where the app is free – you can create a bunch of press around this. You get a bunch of traffic and increased rankings, then when the app goes back to paid you still get a bunch of run off from the campaign.
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When you are a young entrepreneur and you have a project (say a new age TV show) and you need to raise capital for the project. What is the best way to approach Venture Capitalists to make a deal?
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If you’re a young entrepreneur, than congrats! We need more.
That being said, here’s the deal.
Venture Capitalist invest in high risk, high reward startups. TV hasn’t traditionally been a venture backed industry.
However, if you can find examples of companies that have been, then your best best is to ask them.
Other sources of capital. – Friends & Family – High net-worth individuals with a passion for you and your industry. – Government grants – Credit cards / debt
If you believe in it – then finance whatever you can yourself. Regardless, no VC is going to fund an idea if they don’t believe the entrepreneurs willing to risk it all.
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Once you have an idea what is you next step in executing?
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Build something. Sometimes I use Balsamiq, sometimes I code a prototype, doesn’t matter – just create something, then tell the world. Once you tell the world, you’re committed <– that could be the best thing you could ever do. Tell everyone.
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What's the best way to get feedback for a stillborn request for investment from Angel List?
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Tweet @venturehacks or email Nivi and ask him for feedback. You might also try other companies that have raised money and ask them for advice on your application.
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Does anyone recommend the use of virtual co-founders?
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No
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Can anyone recommend a good podcast on things to consider / learn while doing a startup? #startup
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Podcast I would suggest for startups (no particular order) * Mixergy * This week in startups * TEDTalks * Duct Tape Marketing * Marketing over coffee * MeetInnovators * This week in venture capital * Ask a vc * Founders Talk * Entrepreneurial Thought Leaders * Founder Stories * Inbound Marketing * Web 2.0 Summit * From Scratch
I don’t own a TV ;)
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Did you ever doubt that your idea was not good enough to attract a large enough user/customer base?
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Of course. The thing you need to realize is it’s not about the initial idea, but the ability to get something out their quickly – get feedback – and adjust. No idea survives first contact with a customer. What I do have faith in is my ability to figure it out quickly, and scale once I know what works.
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(1) Where is the best place to find a co-founder? (2) Do you recommend joining an incubator for first time entrepreneurs who know exactly what they want? (3) Does an online business really need a tech co-founder?
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(3) Yes you need someone technical on the team., (2) yes, join an incubator, (1) Read this http://www.jetcooper.com/blog/how-to-find-a-technical-co-founder/
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Do you recommend moving to Silicon Valley if you are attempting to make it with a startup?
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You don’t need to move to Silicon Valley. I did my last startup in Moncton, NB, Canada and made it work. Geography is not an excuse for succeeding or failing.
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Hi Dan, Any suggestions on what to look for in a Tech Co-Founder?
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Amazing technical skills and the ability to ship code.
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What is next for you Dan?
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Get excited and build shit.
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We have a few contracts for software development, most of which were found through connections. Do you get most of your work from known connections, or is there another avenue?
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It’s always known connections to the right people but generally I just ask friends who’ve had success who they would recommend … so in essence referrals.
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What made you want to strive to become an expert in your field? I know I speak for everyone when I say, I appreciate you taking the time out of your schedule to answer these questions.
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I like to be world class at everything I do … so no matter what I tackle, I always ask myself if I care enough to be willing to sacrifice to be the best at that.
It’s the reason I ran a marathon, it’s why I moved to San Francisco, and it’s why I started Flowtown.
Why is this important to me?
… personally, anything less isn’t exciting enough to get me jumping out of bed everyday – and to put it add a few comments:
a) I know I can. b) we only get one shot at life. c) I like to compete.
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What are the secrets to great user testing?
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Listen, don’t tell. Conduct it on their computer. Fix the issues after each test .. iterate like mad, especially when you’re small / trying to figure it out.
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HEY, THAT'S MY MONEY!!! HOW TO AVOID LOOKING GREEDY IN THE EYES OF INVESTORS... My startup team is comprised of 3 founders and 3 hires all working for paper. What is a realistic salary expectation for founders (CEO, CFO, CTO) and key hires i.e. engineer - FROM AN ANGEL INVESTOR'S POINT OF VIEW?
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I think founders should get paid enough to live a normal life ($60-$70K/year) and you pay your employees what they need + equity to properly motivate them. If you’re raising money and wanting to pay yourself $90K+ per year, it just looks bad. A great founder would take $90K, pay themselves $45K and hires another person.
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How do you think through new business ideas and industry opportunities -- visually? Break down to component parts & try to reassemble into a coherent whole? Curious as to how your approach relates or differs from what Mark Suster writes about here: <a href="http://www.bothsidesofthetable.com/2011/01/17/how-i-use-visualization-to-drive-creativity/">http://www.bothsidesofthetable.com/2011/01/17/how-i-use-visualization-to-drive-creativity/</a>.
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I haven’t read Mark’s post yet but my process is similar. I’m a whiteboard, wire-framing, mind-mapping nut. I need to see it in front of me. Honestly, all I do is map out a plan that’s unique for the business. Then I figure out how the value might flow (why would someone use this, who are they, would they pay, how do I get to them in an cost effective way) then I start with my riskiest assumption and move quickly to validate or disprove it.
I become obsessed with the industry.
I’m not afraid to pick up the phone, cold call someone, use LinkedIn to find someone who’s recently left a company that might be considered competitive and ask them for advise around the business model and marketplace. I think quick, do something, then review what I’ve learned. I may iterate 3 times in one day .. the faster the iterations the better. I also like to get a sale $$$ ASAP. I’ll try selling something even if it doesn’t exist because I learn soo much by doing so.
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How can we reward our top users without money and without appearing too big brotherish?
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You can start by personally emailing them and saying thanks. Doing something public without their permission isn’t cool. I send DM’s, emails, all day thanking people.
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Hi Dan, As an investor what key measurements are u looking at when considering an investment? Also, what do you think are the first crucial milestones that a startup should be driving towards? Here is another one, completely of the wall... which dropzone would u recommend in or around the bay area ? :) Blue Skies, Eugene.
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It’s the team and what they’ve built so far. I also like to know why they’re solving that problem, and what they’ve learnt so far. What they tried and failed, and whats working really well. When it comes to early stage investing – it’s all gut .. but I care a lot about the team and what they built, not what they say their going to do.
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I'm starting an e-business and I'm working on the website development. Should I create a blog in the meantime? Would it help? How can I keep my customers interacting with my company and even other users?
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You may consider writing about the problem you’re going to solve and guest post. The goal of blogging is to interact and learn from your customer. You still don’t know who your customer is without having a live product.
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I have developed an executive overview and VC pitch deck for a simple, but powerful, idea that solves a compelling business problem. I work full-time and require seed funding to accelerate the vision by building out the technology. Please advise what should be my next steps? Do you recommend doing as much self-promotion as I can via platforms like AngelList? I know i need to get my idea in front of as many potential investor as possible. Thank you very much.
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You’ll have a hard time raising from professional investors without a prototype and some early traction (customers / users). I highly recommend you find a technical co-founder that can build something to validate your idea before approaching investors. AngelList is highly biased toward excellent teams, product (with tractions) or deep domain expertise.
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i am currently building a SaaS, but we are torn between ... 1. just getting the thing to beta with the overall structure and functions working 2. making EVERYTHING perfect to launch into beta we have so many "great ideas" that could be implemented now but take longer to get going - should we wait to implement these "great ideas" in future updates or get them done now?
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The best thing you can do is get real product in front of real customers.
If you havent' done that – do that.
Now, it doesn’t mean to the public .. maybe invite 100 friends to try it, then iterate.
Building features without real people using what you have now and iterating against real usage (hopefully you and your team use it) then that’s just crazy talk ;).
Hope that helps.
P.S. I bet your gut told you to launch early & often. Listen to it.
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We are building an online store for tours and activities. We are based and focused in Guatemala, our goal is to validate the business model & expand towards countries with similar characteristics. We have structured all the business aspects and managed to make key alliances with public and private institutions. We are raising seed capital, but would like to have a US tech investor. What would be the best way to find one ¿?
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Go on Crunchbase and find companies like you, that have raised money from US investors, even if they’re located in other parts of the world. Reach out to the entrepreneurs of those companies to ask them this question. If they like you, they’ll typically make an introduction to their investor. Most investors like to invest in companies they can meetup with frequently enough – hence investing in or around their own city.
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hi dan, i would appreciate it if you could help me with some advice..... i have recently developed a very unique golf freestyle video and i a wondering how could i turn a video into a product? a new art form? the guy has amazing street golf skills.. thx!
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Unfortunately its not an area I know much about. That being said, I would try and find a few buyers for the videos. If you can’t do that – you may want to iterate / pivot on the idea.
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What are some ways to execute a kick-ass beta phase?
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A few thoughts. 1) Get a diverse group (geo + backgrounds) to use it. 2) Invite people to use your product in person (on their laptops), 3) Measure the impact using www.survey.io – iterate and fix all the user flows.
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Looking for sources of "micro-angel" funding (~$100K) for a food start-up. Any suggestions?
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High net-worth individuals familiar with the industry or credit cards. Visa can make an amazing investor, just be sure to ask for money when you don’t need it.
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As founders invest massive amounts of time into their start-up, how critical is it for them to come out of their "hermit caves" and network? Does it make sense to spend this time speaking about your early stage start-up when your product has not even entered Alpha testing?
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Only if you’re doing it with the intention to learn about the market and customers. Typically its way more important to build product, and pull in early users to give you that feedback vs. speaking about it. Product, product, product!
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I'm a college student. I'm learning how to program. I'm studying design. I'm even playing around with building physical products with microcontrollers, cirtcuits, and mechanisms, so I have experience in building all sorts of products. The only problem is I haven't found a problem or an industry - web, enterprise software, green tech, etc - where I feel passionate. How did you find your passion? How did you know what problems really motivated you? And, what would you suggest?
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It all starts with hobbies and interest. It sounds like you have a passion for learning about tech. Have your run into any problems around learning, or building some of it? Look for the problems in your life and then build something super simple / small for yourself. Show it to others and see what they think. Big companies always start with simple ideas.
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Do I take a job that is less than ideal, but that provides enough cash flow and free time to pursue my startup? Or do I just get focused on my startup and give it 100%?
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It’s all about risk reward. If you don’t have a family to support, the go for the startup – give it 100%. Spend 20% of your time building a network of advisors that can help you. These people must have achieved the level of success you’re striving for.
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Has anyone found a referral program system that works great to generate new customers?
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Your existing customers are you best source of referals – just ask.
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What's the best way to commercialize a blog? Create a strong brand, solid social community, sell advertising. What are the other essentials?
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Information products have the best margins + if you can get them into a subscription of sorts – then you’ll have monthly re-occurring revenue.
Darren at CopyBlogger does this best with http://www.copyblogger.com/
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Ok how should I go about this? I want to Microlend or MicroFinance people but this is still in a idea phase here is the thing I want to loan my own my own money out of my bank account and recieve a pecentage back based on how big the loan is but ike I said "Micro" lending I need some logic here.
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Not sure I can help, sorry.
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What are the best resources for female founders of tech start ups?
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probably best to ask a female founder like http://twitter.com/#!/sarahprevette
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I'm not a coder or a designer, however, I learned enough to create my initial product for my online start-up. I've had some traction and have made a small amount of revenue thus far. I'm now looking to add more/better features that customers have request to my product, but I have got to the point where I now need someone much more technical to help. When looking for a technical partner what is the approximate range of equity that seems reasonable to give up?
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Great question. It’s all negotiable based on the traction of your product and how involved they will be.
Here’s the way I slice it up – Co-Founder that’s willing to work for free and at the same level of you (50%) – Technical co-founder that wants to code and get paid something (10%)
That’s the range – move around from there.
All that being said, all equity allocation (giving) should be done with a 4 year vesting, 1 year cliff. Talk to a lawyer first to ensure you set the expectations.
In essence, if they leave (or you fire them) within the first year they get 0. If they make it 1+ years then they get 25% of the allocated equity (25% of 10% for example).
Doing this ensures everyone is in it for the long term and nobody comes in and leaves in 6 months with 50% of your company that you can’t get back.
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What mistakes do you see companies make when trying to use Twitter?
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They don’t think about the customers problem. You should find and share content (and engage with others who do the same) that talks about your customers problems.
Don’t talk about you and your company, talk about the problem. If I ran an airline, I wouldn’t take about flights, I’d talk about vacations & travel.
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How can I determine what sites to target to try to get to link to mine?
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Use http://www.seomoz.org/ – requires knowledge of SEO and keywords.
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How do I know when it's the right time to sell my company?
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If you have a buyer that’s going to pay you more than what you think it’s worth.
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Hey Dan, read your blog and always have good takeaways from it. I have a specific question for you. I'm launching my startup - think Quora for comparisons, next week. I believe my best strategy for getting users on there is to have influentials create content. I've been reaching out to such users in the startup community and have gotten very positive feedback so far. But I wanted to get your advice on the best way to convert such users to write on my site (yourself included :-)). Thoughts ?
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It’s all about phycology. Find out what motivates users on Quora or similar, and insure your app delivers that same value. It all comes down to 1 or 3 things. getting paid, made or laid. If you’re site can give users traffic and/or “status” (aka made) around a topic, then they might participate. Focus on those core metrics and you should do fine.
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have you heard of any luck using outsourced coders from India ....or where do you suggest ? thanks
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I like to outsource from Eastern Europe – something about their code that just seems more throughout and requires less hand holding. I don’t recommend using outsourcing for your startup long term, only if you’re building a prototype to learn quickly.
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I've done everything from creating content to social media outreach and it's driving okay traffic but nothing crazy. How can I get amazing volume of traffic to my site? What is the secret?
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There is no secret. Here’s how I do it though. * Build a product worth talking about (Word of Mouth) * Build some kind of invitation / share option in your app to let your users * Create content that’s soooo good, it makes top Digg/Twitter/StumbleUpon * Buy ads on Facebook * Create stories and get press * Write guest post on other blogs
That a list of a few ideas .. the super secret stuff is still being tested – but you’ll have great results if you implement the ideas above.
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I need to find a website with good programmers. Any suggestions?
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www.elance.com and hire from eastern europe. That doesn’t guarantee good – so be sure to start with a small project and if possible, find a great programmer and have them review the code.
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What are your expectations about a language services company?
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If by expectations you mean – do I think it’s a good idea? I don’t know. I don’t put much value in the idea per se and more about the unique strategy and the team.
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How I can find the right investor (software)? I have a proposal written up including full cost and revenue projections.
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No investor cares about a business plan. They care about real product. Build something then demo it to people. I know that’s not what you want to hear, but it’s true. The new pitch deck is the url.
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Will developers and designers provide services for a piece of the company? How does that usually work?
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You could try that although I’ve never found that worked great. Ideally you can pay them based + equity so that you’ll get their attention and focus on the project. Bartering usually ends up in lack of quality and speed.
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Hi Dan My question is related with something we have now, we are from Colombia, and we went to San Francisco last year and a business acelarator got interested in our project, they requested from us Patent Applications of our technology in the US. But after a year, we are stuck in this process and haven`t launch yet. From a VC perspective it is wise to have the patent or to launch now and later worry about that or even to work in better IP strategy? Thanks
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Launch now.
Just document and file what you can with a date stamp on it.
I use these guys for patents
Adam L.K. Philipp Founder
ÆONLAW 1525 4th Ave., Suite 800 | Seattle, WA 98101 P 206.217.2200 | F 206.217.2201 | D 206.217.2226 | W aeonlaw.com
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One of our patners decided to find employement ,he says its only for a short while.the skills he is going to acquire there might be beneficial to the business but our fear is that he might come back to the business only when it is profitable.should we keep him on or should we let him go?
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Follow you gut.
The fact that you’re asking tells me you want to let him go.
Doing a startup is like going to war, if someone runs away from the front lines – do you really want him back to fight again? Or next time is he going to leave you high and dry?
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How should I approach an angel investor?
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Always a warm introduction. If you can’t figure out someone who likes you, that will say nice things about you, then you probably shouldn’t be raising money.
Find out who they invested in (entrepreneurs / companies), then befriend them – asking for advice. At the end of the conversation, ask them if they’d be willing to make an introduction.
Your initial question is a perfect one to get things going.
Intro in order of value (higher at the top). – Entrepreneur – Other investor – Lawyer – Alumni – Family / Friend
Hope that helps.
P.S. Mark Suster has a great post on this. http://www.bothsidesofthetable.com/2009/06/19/getting-access-to-the-old-boys-club-how-to-approach-a-vc/
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Dan, how did you meet your co-founders at each of your startups? And how did you decide who you want to get into a startup with?
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All different scenarios. At Spheric I worked with them in a previous company, and with Flowtown, we got introduced and worked together on a few personal projects before starting the company. The pattern I see (at a minimum) is you want to build something together first, before committing to a long term arrangement. Criteria: They “play” at the things I work at. I like them as a person. I trust them explicitly.
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If you're not into business plans, as an investor, how would you decide if a startup is worth investing in (if you do in fact invest in startups)?
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Every company I’ve invested in – most recently www.plancast.com, www.oneforty.com, www.foodspotting.com – it was 100% bet on the founders + relationships I had with them and their passion.
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I'm starting a business selling a new food product that is unavailable anywhere else. We are patent pending and we are unveiling the product at the National Restaurant Association in May. We are going to be available online and then we are also going to start selling door to door. I am looking for any valuable information on getting people to order online and to gear people to our website also pitfalls to avoid starting a new business.
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I can only answer one question – so I’ll take the website one.
1) Hire someone who’s done it before in your industry, maybe for a competitor.
2) Do less and iterate. 1 page website w/ simple checkout, then add things as you feel it’ll help increase conversions.
3) Experiment with paid ads (Facebook, LinkedIn, Google) but spend more time on press as it could win you huge orders). Hope that helps.
P.S. Do #1 .. trust me. #1 is the most important.
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Entrepreneurs always struggle with competing priorities and manage expenses very closely. Would it be smart to launch a service or a product without building a functional website/landing page due to the urgency to "be first" in the market? (e.g. awesome tech toy for geeks, but no website)
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You website legitimizes any company. Have at least a landing page.
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I have an great idea that could revolutionize the way we live. I have 2 options: set up a new startup or share my idea with google (or maybe another big silicon valley's company). What/How should I do?
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Google won’t care. Do it yourself. (if it’s that good, then Google’s probably working on it right now, so hurry up).
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I am trying to target potential customers (web developers) with ads on Facebook but I'm getting zero click thrus.
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If you’re paying CPC then that’s o.k. ;) – consider free brand marketing. Facebook is interesting since what gets you clicks, may not get you qualified traffic. I recently helped Startup Weekend (I’m on the board) with their FB ads.
Ads https://img.skitch.com/20110328-g5ree35kd1q9j3ss391kiss8p9.png
Landing Page http://register.startupweekend.org/facebook/
CPL (email) = $4.35 – our goal was $5 ;)
How we did it (% of what matters to get right): * 1-2 core message (15%) * A tonne of images (80%) * Short value driving description (5%)
The thing about Facebook is you never know what image is going to work, so try a lot of them.
Hope that helps.
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I just launched a small online retail business last week, and feel a bit lost about marketing ideas and how to get the most out of social media channels. Twitter is useful but how do I gain followers?
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Curate great links for your ideal customers and share them 3 times per day. If you want a simple tool, you can check out http://timely.is (disclosure: I built this – but it’s free). It’s what I use.
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Hi. I am in the planning (and recruiting) stage for my web start-up. To give you an idea, I am looking for someone who can build a websites with features almost similar to Kickstarter.com. So my questions are: Is there any other site which offers the "drag-and-drop" option that can build the website or would it be best to hire a web programmer/designer who can do it from "scratch"?
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I don’t know of an opensource or hosted version of Kickstarter .. seems like you’ll need to build it.
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What are the top 5 reasons entrepreneurs fail?
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They give up They don’t talk to their customers They hire B players They can’t sell They get shitty advice
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Dan, I have a startup <a href="http://www.hispanoenamerica.com">www.hispanoenamerica.com</a> that we just launched two weeks ago, I have clawed my way to this point and we are at the point where we need some capital to invest in our marketing and execution. Our company and concept has had great response, we have attended several Trade Shows, conventions and we were featured on the local news in Telemundo. Do you know of any VC or angel investors that are interested in targeting the Hispanic Market? I would love to present our BP
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Sorry .. investors like great companies, that’s really the filter. Here’s my top 3 links to help you with fundraising.
Startups: How to Communicate Traction to Investors http://www.quora.com/Brendan-Baker/Startups-How-to-Communicate-Traction-to-Investors
365 days, $10 Million, 3 Rounds, 2 Companies, all with 5 Magic Slides by Tim Young http://knowledgeissocial.com/365-days-10-million-3-rounds-2-companies-all-with-5-magic-slides/
Startup Seed Raising Skilzzz http://swooshing.wordpress.com/2009/03/19/startup-seed-raising-skillzzz/
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What advice can you give us to avoid the fear of start our own company and not stay working for someone else?
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I don’t know … you might not be entrepreneurs – and I would hate to tell you to quit your jobs, have you end up depressed in a hospital because you couldn’t handle it.
That being said, if you really think you can handle it (failing) then quit your job tomorrow – there isn’t a right time. Today is that day.
ESPECIALLY if it’s just you (no family you’re supporting) – you have no excuse what so ever.
Trust me .. even if you fail, and have to get another job, you’ll have had a lot of fun, learned a bunch and be ready for the next one.
I “failed” at the first 2 companies I tried. I just didn’t stop ;)
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What is the best revenue model in job listings and career websites and how these kind of website differentiate itself from others?
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I don’t know the best but a new model is creating a way to measure the applicants skills and providing a VIP service to the recruiters to access them.
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Whats the best startup advice you've ever received?
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Wow. Just one piece of advice? Can’t pick just one. A few nuggets. 1) Hire A’s. A’s hire B’s, B’s hire C’s. So build a strong base. 2) Co-Founders are the largest form of dilution (if you’re raising) 3) Everything around LeanStartup / Customer Development 4) Understand the micro economics of your business early. Acquisition / Lifetime Value, etc. 5) Competition is good. 6) Always ask for money when you don’t need it. 7) If you don’t speak you won’t be heard. If you don’t write, you won’t be read. 8) The bigger the “Why”, the easier the “How”. 9) Think big, HUGE! You won’t work anymore per se, and it’s just more fun. 10) Metrics. “What you measure, you manage).
Most of that advice come from others (Authors, Entrepreneurs, etc) .. google the originator, they aren’t my originals.
Hope that helps.
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What are some great resources to learn how to market your business nowadays? I'm a young entrepreneur, who defied his parents and dropped out of school to found a start-up, and I didn't manage to squeeze in any Internet Marketing courses. Can you recommend any books? blogs? people? resources?
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Books: http://personalmba.com. Podcast: Mixergy, TED, Stanford’s Entrepreneurship Corner. Real value on your time will be finding mentors / advisors that you don’t pay, that have achieved success and want to see you succeed. That will move the needle.
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What questions should I be asking my customers to learn how I could increase my sales?
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Aks them “What do you do 3 minutes before and after you use our product / service?” Then decide if you can build more value on either end of that process to demand a higher premium. The more value you add, the more you can charge.
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What is the success rate for first time entrepreneurs?
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5% I believe. However, that shouldn’t be your goal. I failed twice before making it work $$$. Now I know the pattern have help create multiple companies doing $M+ in revenue. So, should the success rate matter? No. The only thing that matters is that you’re learning.
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How to display testimonials for website and how many?
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Check out Timely.is .. we’re adding our today. I decided to go w/ 2 on the homepage with 50+ on a /testimonials page. I ordered them by occupation and influence so that new users can self identify and feel good about their decision to sign-up.
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How can i sell my social media whytofollow.me?
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What is the best way to approach another startup for a potential partnership?
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Call up the founder and ask for advice.
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What is the biggest challenge in starting up a successful online business?
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Building something people want.
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We're a mobile development firm looking to increase new client sales. We have two full time sales people and we use Salesforce. We've yet to do any sort of online marketing or ads and we have a budget of $20k per month for it. We're considering doing SEO and PPC as well as cold calling to generate leads. My question is do we hire in-house for these roles or contract with firms? Or, stepping back before that question, should we be doing something else altogether?
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You need to first understand what a new customer is worth to you. If you’re average project size is $20K, then use 40% of that. That’s what you’re able to spend to profitably acquire a customer.
I would suggest learning enough to get it going .. Facebook is simple / AdWords is harder but works. LinkedIn might work.
I’ve not found an agency that does it the way I would expect but they do exist. Just ensure you understand your numbers and manage them well.
$50 dollars for a qualified lead might be a good target.
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I have a great start-up idea that has a lot of potential. However, i need a technical person (web developer) who can bring my vision to life. How can i find this person? And what should i do next, now that i have a good idea?
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If you’re looking to find / earn a technical co-founder then Andrew’s article is the best read. http://www.jetcooper.com/blog/how-to-find-a-technical-co-founder/
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I've recently purchased; The Lean Startup, Startup Weekend, and Business Model Generation. Which one do you think I should read first, as I am trying to launch a tech startup next year?
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The Lean Startup, Business Model Generation then Startup Weekend
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