Come for the Ride…

There are an ungodly amount of resources out there that says when doing a startup, you should raise money from either friends, family or fools. For the 10 years I’ve been trying to execute that statement, I was only able to do it twice. Unfortunately the amounts I raised were too low to help reduce any risks and ultimately the startup didn’t really go anywhere.

No, this post does not have the silver bullet to the FFF problem. However, if you do have FFF’s that like your idea but are on the fence, we did find two services that may help you push em over the edge.

The first service we found is Virgin Money. Virgin Money draws up legal contracts that adds a business/legal element to loans between friends and family. For about $200, your fools can get some assurance that they will get money back based on the terms of the loan. Yes, with this service, you can’t just make up random empty promises - on the bright side, you also can’t make up ridiculous rates of return in certain states that forbids it.

The second service we just saw is another startup promoting social savings. Smarty Pig promotes savings and allows your friends and family to help you reach your goal. I would elaborate further but they already have an awesome video intro on their home page that explains the service; (something we should probably do for our web site.)

While we are unable to help you find new rich friends, hopefully the two services above will crack your existing rich and risky friends who like your current business idea. On the flip side, if you know anyone who has more money than sense and like cars, feel free to refer them our way! We could use the help!

For most people, doing taxes is a chore and it’s an after-thought reserved for the second week of April. For business owners and people who are expecting a fat return, we start thinking about them in January.

For the early birds, you are in luck. You are the audience that H&R Block and other companies are interested in targeting. Continue Reading »

I’ve got to agree with Wei a bit. Some of these developers look very good. They have a good backgrounds. But they throw a blanket statement at you with a “cover letter” that is far too generic (why do I care if you’ve been developing in .NET for 3 years when I clearly want a LAMP project done?). They try to oversell themselves by giving information that I don’t care about. I’m very happy that you all have ISO 9000 certification, but that’s, for the most part, useful only in manufacturing where an actual product is made. Code isn’t exactly the same thing. Now, tell me you guys use Extreme Programming or Spiral Programming methodoly and I can get a feel for what you’re all about. I’ve sat here for the last 3 hours looking at people who are bidding for our work and I’ve only come acros 3 people that I feel good about. Either the general web programming population isn’t as mature as I would hope or or they are just horrible communicators.

Wish me luck…

For a startup, the runway can best be described as the cash flow you have to keep operations afloat. The use of the airplane runway paints a vivid picture because once you reach the end, you are forced to either take flight or crash and burn. Unfortunately for most startups, they usually result in the latter. However, choosing the right plane and having a clear flight plan may help you avoid tragedy.

Like all things in life, if you have cash (or credit), then you have some wiggle room to make things happen. Without cash, nothing happens. On the flip side, if your runway is too long, it’s also possible that nothing may happen. A plane that never takes off is basically a bus… and no one gets excited about hopping on board a bus.

The trick to making a startup work is to make sure you can create a reasonable runway for the startup you want to take flight. Obviously if you want to fly a Jumbo plane, you will need a longer runway. If you only have enough money to maintain a short runway, you will have to reevaluate your plane; this means shaving off nice-to-have features and focusing on the core necessities (e.g. the engines and the wings).

Realizing what you need to shave off early on will help significantly as you will *hopefully* end your project with a lite but fully functional product instead of a half-completed, bloated pile of junk. Obviously, you can’t fly a half completed plane so what’s the point of trying? Surprisingly many startups do just that… They dive in and just build and build without looking at the whole picture and the length of their runways.

It makes you wonder don’t it?

So, how long is your runway?

For the people who have been following this blog, we posted a video of Truemors a couple of months ago where Guy Kawasaki talked about how he started a web based business with $12k and a few weeks of time. Well, after this past weekend, Guy posted a truemor about the Atlanta Startup Project, Skribit and how we were able to start a web business with $0 financing.

Well $0 is of course a stretch, there were SOME costs… but what does $0 really mean? Well, here’s the dirty dirty truth based on my observations.

$50 in domain names - I don’t have the hard numbers but in registering our name and in registering a few more variations to protect the brand, we’re looking at least $50 in expenses.

$1,000 in legal, misc fees. I admit, I completely ignored this part of the project, on purpose. I can’t wrap my head around it.

$2,400 in food - we were fed; a lot… I can’t say they were all great or healthy food, but we were well fed. There was also a ton of beers and drinks and so forth. If we didn’t have this, people wouldn’t stay.

$5,000 in office space - I’m not sure of the actual costs but I’ll throw in $5,000 as an estimate for renting the entire floor of where we needed to be. In addition to the main room, the various groups worked out of several different, smaller conference rooms which was necessary or we’d probably end up with nothing.

$96,000 in laptops/equipment - If the 64 people who showed up came with just pen and paper, we probably wouldn’t have accomplished too much in the 54 hour period. If you estimated the avg. laptop cost to be $1,500, then there would be close to $100,000 in equipment alone.

$185,000 in free labor - We worked about 36 actual hours… So if our average comes out to be $80 in consulting fees x 64 people, then that’s how much work we’ve put in in that time.

Priceless - Things we got for free due to networking. Things we will get for free as a result of this weekend’s networking. We got a few freebies from this weekend. A few months of web hosting… a few connections into the blogger world, connections to VC’s in the event this project takes off. All great and amazing things if you’re a struggling startup.

Even MORE Priceless, internal networking - You know how hard it is to find people who don’t make excuses, have a variety of talents, hop over any and all obstacles and apply that determination to businesses? Close to impossible. I’m really glad I was able to experience it cause… without seeing it for myself, it would have been hard to believe.

So is free really free? No, not really. Even though I worked about a week’s worth of hours in 2.5 days, I guess the difference is that we all think this project may turnout to be greater than the $290,000 of Monopoly money (and effort) we invested.

All I’ve gotta say is… if it’s possible to get $300,000 to start a company, find a group of smart business “snipers” who come in, do what’s needed and hop out, I would be all over it. After all, in the web world speed and execution is way more valuable than the alternative.