Posts filed under 'fgfischbach'
December 6th, 2007
Today I was able to sit down with Pete Tormey, founder of Action Patents. Pete is a registered patent agent who specializes in providing patents for Software, Electronics, Life Science Instrumentation and Business Methods. From blogs to entrepreneurial events, patents are always a controversial topic. This is why I took the opportunity to speak with an expert. Below are the questions and answers from our conversation.
Q: What is the difference between a patent and a trademark?
A patent protects an inventor for the production or sale of a new useful invention. Whereas a trademark is protection for a distinctive name, symbol, motto or emblem that identifies a product.
Q: If I were to hire a patent practitioner, what are three specific things I can include in my description to make your job easier and reduce costs?
The most important thing is to move beyond just the new idea so that you can explain to the patent prosecutor how to make and use the invention. Secondly provide at least one good sketch illustrating the invention, and finally provide a good description of the technical background and need for the invention. This helps the patent practitioner explain the purpose and value to the patent examiner.
Q: Looking beyond the value in a legal action, how else can patents help me?
A patent has marketing value too. For example customers may view patented technology as superior to a competitor’s product which can greatly help your sales process. Also, for startup companies, getting investment capital may be dependent on having an idea that’s patentable. Patents provide your company with the ability to show people what you do that no one else does. That is a significant competitive advantage.
Q: I have heard people say that a patent is only as strong as the dollars you have to back it, what are your thoughts?
Most patents never go through an entire legal challenge. Simply having a patent may be sufficient because your competition does not want an expensive court battle either. If patenting your technology prevents your competitor from attacking you directly in the market, the patent has done its job without the cost of a court battle.
Q: I have also heard people say that the patent is only as strong as the reputation of the patent practitioner who filed it, is this true?
It’s not the reputation that matters, but the technical knowledge and experience in that industry that have the greatest effect. Most inventors are not really aware of the person who actually drafts the patent. Large firms often use technical writers. The practitioner needs to clearly articulate the invention and draft solid claims to it.
Q: Who may apply for a U.S. Patent?
A patent may be granted to the inventor or discoverer of any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, or on any distinct and new variety of plant, which is asexually reproduced, or on any new, original, and ornamental design for an article of manufacture.
Q: On what subject matter may a patent not be granted?
A patent may not be granted on a useless device, on printed matter, on an improvement in a device which would be obvious to a person skilled in the art, or on a machine which is not useful such as an alleged perpetual motion machine. A patent may also not be granted for an idea or abstraction such as a mathematical formula.
Q: If one person furnishes the ideas for invention and another person employs him or finances his experimentation, should the patent application be filed by them jointly?
No. The application should be signed by the true inventor and filed in his or her name.
Q: Is there any danger that the Patent and Trademark Office will give others information contained in my application while it is pending?
All patent applications are maintained in the strictest secrecy until the patent is issued or the application is published. Publication is limited to only certain applications. After the patent is issued, however, the file containing the application and all correspondence leading up to issuance of the patent is made available in the files information room for inspection by anyone, and copies of these files may be purchased from the Patent Office.
Q: I have made some changes in my invention after the filing of my patent application documents. May I amend my patent application by adding a description and illustration of these features?
No. The law provides that new matter cannot be introduced into the disclosure of a patent application. However, there is a procedure called “continuation-in-part application” that allows the patent applicant to file a new application which contains new subject matter to replace or supplement the original. You should notify your patent agent immediately of any changes you make in your invention.
Q: While on vacation last summer, I found an article on sale which has not yet been introduced into the U.S. or patented or described in the U.S. May I get a U.S. patent on this invention?
No. According to the law, a U.S. Patent can only be obtained by the true inventor, not by one who learns of the invention of another.
Q: Does the Patent and Trademark Office control the fees charged by patent agents for their services?
No. The Office maintains a roster of registered patent practitioners, but the Office does not control fees, nor will the Office help you select a patent agent.
Q: If I obtain a patent on my invention, will that protect me against claims of others who say that I am infringing their patents?
No. There may be a patent of a more basic nature on which your invention is an improvement. If your invention is a detailed refinement or feature of such a basically protected invention, you may not use it without the consent of the patentee, just as no one will have the right to use your patented improvements without your consent.
Q: What do the terms “patent pending” and “patent applied for” mean?
They are used by a manufacturer or seller of an article to inform the public that an application for patent on that article is on file in the Patent and Trademark Office. The law imposes a fine on those who use these terms falsely to deceive the public.
Q: Can an inventor sell his right to a patent or patent application to someone else?
Yes. The inventor can sell all or any part of his interest in the patent application or the patent.
Q: Does a U.S. patent protect my invention in other countries?
No. The U.S. patent protects your invention only in this country. If you wish to protect your invention in foreign countries, you must file an application in the patent office of each country within the time limit permitted by law. Check with your patent agent about costs before you decide to file in foreign countries.
Pete has a great website with a lot of practical advice. He has a number of excellent podcasts–take a listen to Patent Basics for a great example–where he speaks in very clear and practical language about patent related legal and invention issues (here’s his request form for a CDROM with them) which give you can idea of what it might be like to work with him. One question we get a lot “is what does a patent cost?” Pete has a great “Patent Fees” section that addresses this directly
Action Patents charges $100 per hour for patent preparation and prosecution. There are additional costs such as filing fees and possibly drawing fees. The cost of a typical patent application generally runs from $3,000 for simple inventions to over $7,000 for complex business methods and software inventions.
The legal fees vary depending upon the technical complexity of the subject matter, the quality of the written description provided by the inventor, and the number of revisions required to accurately describe your invention. If you provide a good written description of the invention, your legal fees are less. Government fees are subject to change.
Once an application is filed, there are other costs incurred while the patent is pending. The United States Patent and Trademark Office will issue an “Office Action” setting forth their findings on patentability and may require the Applicant to file a response. After one or two responses outstanding issues are usually resolved. Each response generally incurs about $1,000 in legal fees. After the patent is allowed there is an issue fee of $700 plus a $200 preparation fee.
Once a patent issues there are maintenance fees at 3 1/2, 7 1/2, and 11 1/2 years. They are presently $450, $1,150 and $1,900 respectively for small entities. The maintenance fees are subject to change by the U.S. Patent and Trademark Office.
November 30th, 2007
We have all heard of brand names like Google, Cisco, Nike, Starbucks , and Lowe’s. Have you ever wondered how these companies got their names? You probably haven’t heard of Ansearch , N-TRON, InSport Int’l, Caribou Coffee, and Handy Andy. To me Ansearch sounds more like a search engine than Google, N-TRON seems more like a network router than Cisco, InSport is closer to sports apparel than Nike, Caribou Coffee appears more relevant to coffee than Starbucks, and Handy Andy sounds more like home improvement than Lowe’s. We all know there is more involved in marketing than just names, but I wanted to learn how developing the right name can improve my marketing effectiveness. Today, I was able to sit down with Athol Foden, Founder of Brighter Naming, to pick his brain for naming insights. Athol has over 15 years of experience in helping clients name companies, products, services, and taglines. Please visit his website for great articles on name generators, characteristics of good names, and naming biases and influences.
In addition to this blog, Athol will be joining us next Friday, December 7th at the Bootstrappers Breakfast in Palo Alto. Come join us and engage in a round table discussion and ask Athol your own questions.
Q: How does a strong company name influence presence in the marketplace?
It allows you to stand out from the crowd, gain quick and clear customer mindshare, and shorten all your sales and marketing messages.
Q: What do you think is more important, a name or a logo?
In retail, a logo (or even more importantly a color scheme) are the most important when you are selling “off the shelf” via packaged goods. For items where the logo cannot be seen, for example fashion clothing, the name recognition is more important. In high tech, when selling via the internet or phone, the name is more important. In some cases, the icon (mini logo) may be also very important e.g. embedded in a website, cell phone, etc.
Q: In our experience we see startups rollout a product name which is different from the company name. We believe they should put all their weight behind one name instead of confusing people with multiple names. What are your thoughts about this strategy?
Most startups only have so many marketing dollars at their disposable, so it is often easier and cheaper to have one name to initially promote. However, if the company will have a number of product lines in the near future (under 18 months), then you need a naming architecture that plays off the company name, or you need separate product names.
Q: It seems like naming the business is an emotional step that most founders want to own, how do you convince people you can produce a better result?
Many smart founders waste many, many hours before they call for help. Very few have the talent, experience and knowledge to do it themselves (unless they will always be a small Mom and Pop). This is especially important for a business that will go nationwide soon. The legal costs and risks alone are enough to have many ask for help. However, they still own the process and final decisions. All we do is enable the creativity, provide names that are legally clear, and facilitate the decision making process.
Q: Your website says you can help a startup come up with a name in three weeks, how much of the founders time does this require for you to deliver?
For a small business, we only engage the founder in meetings and discussions for about 3-4 hours a week during the project. Of course, they spend time (usually after hours) thinking about the names, discussing with colleagues, etc. We want to make sure they are very comfortable with the final name.
Q: What are the legalities of finding a name?
To register a small sole proprietorship, it only has to be clear at your local county business office. They don’t check with anyone else, or to that matter really care. To incorporate, it only has to be clear in your state. They don’t check with anyone else, not even their own counties! All this is OK, as long as no one else in your same line of business has the same name… and you will never run into them doing business anywhere in the world.
So the real protection is to do a thorough nationwide search, starting with both registered and common law (unregistered) trademarks, which provide Federal protection. A simple Google search is not enough.
Q: Without having to hire an expert, what are three pieces of advice you would share with startups to figure out a good name?
- Don’t try to find one name. First list as many as you can… 100+ is a minimum starting point.
- Don’t be naïve. People have been naming businesses for years… and 1000 trademarks are filed a day. You will probably have to be somehow unique or different. Think outside the dictionary.
- Remember, you are naming it, not describing it. First list all the major players in your industry and all competitors. Make sure you don’t end up sounding like them.
November 27th, 2007
I have had two interesting conversations with friends who are frustrated with some of the internal deficiencies within their companies. Both of my friends are accountants, but work for different firms and in different departments. However, they are both part of itinerant work forces and have the same problem. While out of the office, they both do not have access to their local area network. The specific pains within the overall problem were that my friends could not access their email while in the field or obtain information about a customer who was not directly their client. Where there is pain, there is opportunity. Although this problem that has been solved 20 years ago, it was interesting that these 100 million dollar firms were still operating under these business conditions.
Thinking back to last months Sales 2.0 Conference, I thought about one of the breakout sessions that I attended, “Using Web 2.0 Technology to Enable Strategic Selling: A Sales Executive Forum.”
Moderator:
Gerhard Gschwandtner, Publisher, Selling Power
Panelist:
Clarence So, Senior VP Marketing, Salesforce.com
Umberto Milletti, CEO & Founder, InsideView
Lisa Caswell, VP Global Sales & Alliances, Aravo
Below are the questions and answers from the panel discussion that I found relevant to addressing the opportunity to solve my friends’ critical business issues.
Question: Please define Sales 2.0.
Umberto: Sales 2.0 means having a more relevant conversation with your customers. It has always been an information problem. I believe that sales people are ultimately information workers that try to match a customer and their needs to a solution. It used to be very difficult to learn about customers. You would get leads without even knowing who is this company and who is this person. With Sales 2.0 it’s drawing lots of information about companies, their people, and making it relevant to your sales force.
Clarence: As a company grows, it not only becomes challenging to manage the business operationally, but also manage the selling process. Sales 2.0 allows companies to automate operational process, sales processes, offer richer customer support, and an overall better customer experience.
Question: How many technology tools do you use today?
Lisa: Technology gives us different ways to collaborate. Sales models have shifted from pushing or pulling to co-creation. Technology allows us to co-create the sale with the customer. Internally, we use several technology tools, but only two for our sales team: Salesforce.com and InsideView. With these tools, we can track the customer relationships, account relationships, and history. Historically, getting everyone on the same page has been a problem. Now, we have common dashboards, reports, and a place to access data to align everybody objectively. This helps us get rid of the anecdotes and use data to drive decisions.
Question: Is a sales more an art or a science?
Lisa: I think the ratio is 85% science and 15% art. If you track the number of phone calls to the leads, to the close rates, and measure what you learn, you take more of a systematic approach than feeling your way through it.
Clarence: I think the ration is 70% science, 30% art. I believe sales is more science because you need metrics to measure your effectiveness. For example, measuring our web presence. We live and die by our website traffic. We drive everyone to the website and measure how many people are bouncing, who is downloading the white papers, how much time people are spending on our site.
In our business model, everybody comes to the website at some point. I know down to the decimal point how many percentage of leads I get inbound through the website. We model how everybody comes in and then try to automate as many as possible. It’s a very substantial operational modeling process that we run. Once you get in through the website we use Salesforce.com and assign the leads.
Gschwandtner: With all the technology that’s out there, we should not forget that the purpose of business is what, to create a customer. How do we create a customer, by helping the customer win. How do we help a customer win? We need to understand. A lot of companies are still arrogant and say I know what our customers need and want. This is height of arrogance and ignorance. We need to know what is on the customer’s dashboard, what metrics they are looking for. If we don’t know what is important to the customer, we have no leverage point for having a conversation.
My thoughts: If everything above is true, then why do my friends have this problem? With all the tools, customer information and resources available, how come someone has not closed a deal with these accounting firms and upgraded their IT infrastructure? How come these firms do not have any team collaboration technologies? Is it because most financial firms have IT departments that assume employees should have access to company applications and data stores only while they are on company premises and connected to an internal local area network? Maybe the partners have not re-thought their business processes in light of what’s now available? Perhaps when the partners were paying their dues on detailed project work many of these technologies were not widely available, and their concept of the work has been shaped by that. These all seem like opportunities for selling. It seems obvious that if you have people in the field, they need access to the firms resources.
November 2nd, 2007
The ANZA Technology Network is an independent organization designed to help Australian and New Zealand technology companies explore market opportunities within the US. They offer a variety of programs which connect companies with industry leaders who can help them find the perfect revenue model, market niche, and investor plan. While I was at the 2007 Gateway to the US Summit conference I had a chance to talk with Frank Carbone, one of the featured CEO’s and founder of Wanted World Wide. Below are the questions and answers from the short interview (with some hyperlinks added).
Q: What were your three biggest concerns in trying to penetrate the US market?
- How and where do we start?
- What is the best way to go about attracting investors?
- What are the differences (including legal differences) between doing business in the USA and here in Australia?
Q: What were the three biggest surprises from your visit to Silicon Valley?
- The amount and depth of networking that does go on.
- The way that people were happy to share their knowledge, talk about their experiences, provide referrals, if they had any, and in general how helpful everyone was.
- The biggest surprise was resulting interest and how quickly everything moved (and I’m not talking about how fast everyone seems to drive). We know we have an excellent product and concept but fully expected things to take a little longer than they are shaping up to.
Q: From your own perspective, what specific benefits did ANZA offer as a part of their service?
ANZA allowed us to meet with people that we might have not had any contact with otherwise or would have taken a lot longer to find! The information provided by the other mentors (ours was unfortunately not able to be there), the VC’s, Viki, the panel sessions and Australians now living in the USA was of enormous benefit.
There was a small group of diverse presenters at this program which meant that we received valuable information and feedback from them also without the feeling that we all had to compete against each other. A major benefit of this program was of course the networking and the fact that it exposes different business types to VC’s and other interested parties.
Q: Would you like to share any other thoughts or suggestions?
We received excellent service from the ANZA “Gateway to the US” program. This was the first time we had ever presented at such an event, so we felt a bit under prepared and wishing we had known a few things: e.g. our presentation no doubt could have been better, but we have no complaints about the program itself and the level of service we received. It was quite a learning curve for us.
November 12 update: See ANZA Gateway Summit ’07 – It’s a Wrap! for more info on the 2007 ANZA Gateway Summit.
November 1st, 2007
While at the Sales 2.0 Conference on Tuesday, I attended a panel presentations titled “Inside Sales 2.0: A Report From the Front Lines.” Below are some questions and answers that I found interesting.
Moderators:
Panel:
Question: Can you describe your inside sales team?
Stephen: There are four groups; corporate accountants, a federal group, and two regional groups broken down by product line.
Shelly: Our sales force is comprised of 50 reps who are geography based.
David: Before the merger with Veritas, we decided to make everyone sell the entire product line. We soon found out this approach would not work. We had too many products for any one person to know enough about to answer customers’ questions. We now have four different layers of product segments mixed with inside and field people.
Question: What is the biggest difference in inside sales from enterprise to on demand?
Shelly: There is not much difference. This goes back to the focus of what are your objectives? Its either owning a market, owning a product or owning some segment of the opportunity, be it by deal size and applying the right execution against it.
Question: What were the biggest challenges you faced with inside sales?
Stephen: The biggest challenges we faced was from all of our mergers and acquisitions. After several acquisitions we offered a wide range of products pricing from a 35 cent label on a cartridge to a 250k enterprise tape library. It was too difficult to incorporate two different strategies and models to sell the product groups so we scrapped everything. We developed new process, new techniques and found new people.
Question: How has the growth impacted your inside sales team?
David: We have had several hyper growth phases. Some happened through our own product sales and some happened through mergers and acquisitions. Employee job security is always a factor in any M&A. In order to manage the acquisition process and empower our employees, our sales managers have their sales teams develop the business plan. This way the employee is working to a plan that they believe in, instead of giving into a process to hold a job.
We found this to be an effective approach because with each acquisition, we had to learn a new set of products and processes. We sat through endless meetings learning how one another did things. However, in the end, this made us more communicative across all departments.
Stephen: We are always interviewing people whether we have positions open or not. This way we do not miss an opportunity on finding a super star. It is important to be aligned with your HR department and educate them on the type of people you are trying to find. We are continuously training, not just product training but real sales training. We are always rebuilding our sales process to meet the needs of the customer.
Shelly: We had a capacity issue. We did not have enough reps to meet our customers needs. Therefore we opened locations based on where we could find pools of talent and customer demand.
Question: Which tool(s) have made the biggest difference for you?
Shelly: We broke our sales process up into three groups: small business, mid-sized, and enterprise level. My secret to laying the infrastructure for a group is to have a solid CRM system for everyone in the company who is customer-facing. This enables us to keep the communication open.
David: I think that the most important thing is building the right foundation by valuing your people and valuing your customers. It’s not the technology. Once you have that culture where collaboration and valuing your people is part of your thinking, then you can bring in technology to help drive it further. Buying the SuccessFactors application has helped us incredibly: it allowed us to align our goals with tracking and reporting capabilities. We can profile our people and see who’s who in the zoo and who should we be promoting.
Stephen: Besides SuccessFactors and a CRM system, instant messaging has been huge for us in terms of being able to communicate with the customer on a real-time basis.
Three lessons I took away for startups:
- Organize your marketing and sales in alignment with how your customers want to buy. In particular, requiring each salesperson to be super knowledgeable about the product line is probably unreasonable.
- Think about what each employee can own as an area of responsibility, for example a market, a product, or an aspect of a sales opportunity.
- Think about using IM to communicate with your customers if they are open to it. One point that wasn’t made is that, like e-mail, it’s nicely self-documenting and easier to manage and recycle than a phone call.
October 26th, 2007
While at the ANZA Technology Network - 2007 Gateway to the US Summit, I attended the Marketing Business Forum panel discussion. This was a question and answer session on how emerging technology companies can gain traction using innovative marketing tools and tactics.
The moderator: Chris Shipley, Co-Founder & Editorial Director, Guidewire Group
The panel speakers:
The two hot topics of the hour were “Social Media” and “Blogging.”
Mike’s thoughts on social media:
Traditional, yet still highly influential, social media mediums include message boards, user groups, and forums. However, blogs, vlogs, podcasts, and wikis are becoming the more popular social mediums of today. If done correctly, social media can be an effective marketing strategy to reach larger audiences. Mike believes that the various mixes of social mediums is developing a new brand of influencers, enabling companies to pinpoint smaller niche audiences.
Buzz shared a story on how blogging helped him enhance his relationship with customers:
Buzz believes you cannot afford not to blog. While working with his technical team, he realized they were the only ones using a certain type of terminology. Through blogging he was able to have conversations with customers and learn that his messaging was wrong. Additionally, he was able to find someone who became their biggest evangelist. Blogging allowed him to obtain feedback from prospects and incorporate features into the product roadmap.
Sean and Ann Marcus have written an article on How Do Blogs and Wiki Help Me Collaborate With My Customers that has some tips that are relevant to this topic, three key ones:
- Plan Ahead: schedule your level of effort and some publication targets and stick with them.
- Focus for Effect: pick a few topic areas that are relevant to your prospects and explore them.
- Cite References: so many new bloggers write as if they were distributing hardcopy, link to your sources.
October 22nd, 2007
Today is the kick off to the 2007 Gateway to the US Summit, hosted by the ANZA Technology Network at Plug and Play. The three day conference is the beginning of a three month program designed for Australian and New Zealand companies who are considering the possibility of doing business in the US market. I caught up with Viki Forrest, CEO of ANZA, last week for a short interview.
Q: What are the top three concerns Australian and New Zealand firms have when they try to enter the US market?
- The cost of doing business in the US (relative to Australia it is extremely high)
- Determining the best market entry strategy (there are so many options!)
- Identifying the best partners/channels to market (without a trusted personal network to rely on, this can be extremely daunting)
Q: What were some of the biggest surprises for the companies who visited Silicon Valley last year at the Anzatech Forum?
After a brief visit to Silicon Valley there is enormous excitement about the size of the opportunity and how BIG everyone’s thinking is in the Valley. After a couple of months of working with ANZA most CEOs realize (1st surprise) they will need 2-3 times more money than originally thought, (2nd surprise) their business plans/market entry strategy has been completely re-written and (3rd surprise) they are truly shocked by the cost (cash and options) of employees.
Q: What specific benefits does your organization offer as a part of their service?
Our programs are built around providing seasoned executives who mentor the companies. This delivers benefits at a very personal level to the executives participating in the program. At the end of the day they are far better prepared to do business in the US. Secondly, our mentors and our members provide personal introductions to their trusted networks of executives. The benefit here is that the executive is not starting from scratch in developing a network, this results in huge benefits in terms of speed to market: 80% (at least) of business in the US is conducted through personal/business relationships and networks. Arriving in the US from a foreign country-–without a network-–can be an insurmountable obstacle to doing business. There are exceptions but they are rare. Our programs have been designed to specifically address this obstacle by connecting CEOs in a trusted environment.
Q: How do you think your companies measure or assess the quality of the service you provide?
We track the performance of our clients on 3 dimensions: investments secured, US revenues, and US strategic alliances/relationships. These results form the basis of our program exit interviews with our clients.
Q: Wednesday is full of great business sessions, who within Silicon Valley would you like to attend these sessions?
Our business forums are designed for the Australian and New Zealand executives who generally have not done business in the US before. Any foreign executive new to the US would get a great deal out of attending, as would any young entrepreneur starting their first venture.
October 10th, 2007
This is the first in a series of blog posts on where a start-up team might look for their first office. One of the first types of office space to consider would be space in a business incubator.
A business incubator is comprised of multiple businesses operating independently within one location or under a membership group. The objective of the incubator is to help its businesses get started and grow. Incubators offer services that can help entrepreneurs overcome a wide range of obstacles by reducing startup costs with a shared system of support and resources. Most incubators offer shared office space, utilities, and services that create a unique environment for new businesses to grow. Incubators are known for helping startups lower overhead costs, create networking opportunities, and increase the chances of survival.
Tenants in business incubators share overhead costs such as utilities, office equipment, IT support, conference rooms, laboratories, and receptionist services. Additionally, basic rent costs are usually below the normal market value for the area. Often, incubator managers and staff members provide insightful advice on a broad spectrum of issues including, business development, market research, strategy, and fund-raising. Jim Robbins, Director of the Environmental Business Cluster believes, “founders are surprised to learn that they can get startup services for no more than the cost of space, furnished units, strategic planning advice, and free common areas like conference rooms.”
With the desire to create an entrepreneurial environment, some incubators host a variety of events that cater to both their internal members and external community. Plug and Play Tech Center, one Silicon Valleys largest incubators, is well known for hosting conferences and entrepreneurial events. Some of their past conferences and events include the TechDirt Greenhouse, ANZA Technology Conference, Web 2.0 Expo, and monthly workshops like the SVASE Startup-U and VC pitch sessions. As a frequent attendee of these conferences, I appreciate the opportunities to meet other entrepreneurs, keep in tune with new technologies, and learn from distinguished guest speakers.
There are many factors involved in transforming an idea into a marketable product. Besides the significant technological challenges, building and operating a business is very complicated. The Small Business Administration reports that over 80 percent of businesses fail in their first five years. However, the National Business Incubation Association claims that 87 percent of businesses that graduate from an incubator program are still in business after five years. Since access to other startups, management professionals, executive mentors, and expert consultants are so readily available, it makes it easier for incubator tenants to fill gaps in their business.
If you are considering a business incubator you should make sure that your firm’s focus is aligned with the incubator’s mission and then schedule an appointment with the director. Most incubators have initial requirements before incubation consideration. Some incubators are industry focused and only cater to certain segments like Biotech, Cleantech, Software, and Semiconductor. Like investors–and remember many of these organizations will ask for equity–directors want to meet with the entire management team and see several written plans like marketing, financial, and product roadmap. Evan Epstein, Chief Operating Officer (Silicon Valley) for the Girvan Institute of Technology says, “It helps to be referenced in from someone within our network.”
September 25th, 2007
Today I attended a lunch event hosted by SVASE and Pillsbury Winthrop. The title of the event was “First Customers: Targeting The Right Customers To Build And Sustain Your Business.” The featured panelist were John Witchel Of Prosper & Bruce MacNaughton Of Crosslink Capital. It was an informal questions and answer discussion between the crowd and the panelist regarding ideas on targeting your first customers. There were several good questions and answers, however the two I found most beneficial are below.
Audience Question: Can you share your opinion on launching a business to consumer website?
John Witchel’s Answer: For those of you who think all you need to do is put up a website and something will happen, let me make it clear for you… nothing will happen. Launching your website is so crucial to the success of your company, especially in the consumer space. In our model we needed two types of users; the lenders and the borrowers. In planning we learned that we needed more than just lenders and borrowers, we really needed a community of leaders who would monitor specific groups. Therefore we created group leaders who would be responsible for certain types of loan relationships.
I spent months on the phone convincing people to be lenders, borrowers, and group leaders. I asked every favor I could of everyone I knew just so the website had content and an engaged community prior to launch. I had to deal with people concerned about fraud, security, model won’t work, you name it. All I could do is promise that it will work and sell them on the vision.
Really, what do we do? We mediate a transaction for a loan to take place. There are a thousand and one different places you can get loans. We do not loan money, we solve problems. Everyday people need cash to fix a car, build a deck, pay off a credit card. We solve these problems. Lending money allows us to solve the problem but the customer does not think their problem is getting a loan. Their problem is having enough cash to buy a flat screen to host the biggest super bowl party.
The point is nothing just happens, there is always an inside job. Your role as the founder is to orchestrate everything and make it happen.
Audience Question: What does the “right first customer” mean? Isn’t the point to collect revenue?
Bruce MacNaugton: Everyone knows that your first customers are usually your friends and family, so you are not fooling anyone. You need to understand that you have not successfully closed your first true customer until you have sold to a complete stranger.
Your first customer is important because they will help you figure out which features are important and which they do not need. We often see people startups build products with too many features. They have a solution for everything. This really means they have a solution for nothing.
John Wichtel: There are some businesses that are primarily consulting firms that have some IP but not a working product. Then there are product companies that chase the consulting dollars to keep the lights on. Picking your first customer is very important because you are going to feature this customer as a super star. You want to find a customer that you can develop a story around. The next set of customers will want to know who is using your product and if they have the same problem as the person you previously helped.
September 18th, 2007
Do you need venture capital to build a successful company? Mike Lanza does not think so and he has several experiences to prove it. Last night I attended the SDForum Startup SIG to learn how Mike started four companies without venture capital. It was a interactive presentation where Mike addressed his observations and experiences of entrepreneurship.
Mike’s Entrepreneurial Career
In 1986, fresh out of school Mike started Lanza Laser Publishing. It was a graphic design company which employed Mike and a part-timer. It was not Mike’s intent for this to be a high growth company, but he ended up selling it in 1988.
In 1993 Mike started Digital Newsstand, an online news service. In this venture he had large aspirations of building a high growth company, but ended up spending two years on it without ever hiring employees or launching a product. Although the company folded, Mike started it with his own capital and no outside investment.
In 1995 Mike founded Just in Time Solutions, an online bill presentment and payment system, which is now known as Avolent, Inc. He grew the company to 65 employees and $6+ million revenues. In 1998 he left the company shortly after he took his first round of venture financing.
In 1999, right in the middle of the dot com bubble, Mike founded 1View Network. It was an online financial information consolidation company which he grew to 20+ employees and $1.5million/yr revenues. He raised $1.3 million in angel financing. A year later, in 2000, he successfully sold the company to Digital Insight.
Mike’s most recent experience was developing Click.TV, a web video technology. He founded the company in 2006 with his own capital and grew it to five employees. He recently sold the company with zero revenue. The acquisition has not been disclosed to the public yet, but you can read Christine Herron’s and Michael Arrington’s blogs for more Click.TV coverage.
My three takeaways from the presentation
- The value of software patents
- Successfully bootstrapping your company
- Exit strategies for non venture backed companies
Patents: Mike believes that “patents do not do anything expect create work for attorneys.” If your technology is so unique and innovative process the paperwork but focus your time on running the business.” I agree with this statement because in my experience, I see too many technologist spend more time worrying about patents rather than building a business. Patents are only as strong as the amount of money you have to back them. Most companies use patents as defense mechanisms in litigation engagements. Your customer will never ask you if your technology is patented.
Bootstrapping: an attendee asked a question regarding his methods for bootstrapping a company. Mike said, the best form of financing is through revenue. In the beginning all of his early sales were consulting jobs. He eventually refined the product and his process so that it could be productized. In Gerald Weinberg’s book “The Secrets of Consulting” he coins the phrase “nothing new ever works.” This is especially true for technology. When the technology is introduced into the market it takes many revisions before it actually leaves the inventors hands. We believe that selling the tool as a consulting service is an effective method for jump starting the sale and finding your early adopters.
Exit: when you finance a company on your own, you have the opportunity to sell whenever you want. When you raise venture capital, sales opportunities are usually ignored until the money dries up. Most selling decisions take a long time because your investors will have to approve the deal. Its just how the economics work when you play the venture game. VC’s will not settle for the moderate gain unless they have to. If you take money early in the fund, they do not want to sell early because then they have to give the money back to their limited partners and they won’t be able to charge as much management fees.
My net net: these days it seems like the trend is to develop a ten slide PowerPoint presentation and try to raise venture capital. From the pitch preparation and networking events I have been to throughout the valley, it seems like most entrepreneurs do not have a real plan for spending the money. My observation is that many of the entrepreneurs are trying to raise money to pay themselves a salary while they entertain an idea.
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