Are you bankable?

Simple fact:  If you've never started a company before, or weren't part of the core group of a start-up company that became successful, it will be much harder for you to raise money, especially these days.  In other words, investors will not consider you "bankable."  This doesn't mean you don't have a great idea or the promise of a great company, it just means that investors put you in a much higher risk profile.  However, if they really like your company's product and market, they might fund you with a plan in place to bring in someone who has "been there / done that" before.  If you want to avoid this, perhaps because you don't want to lose control to an unknown, then the best remedy for you is for you to find someone yourself, who you are comfortable with, and who is "bankable" to join your team.  This person will be the rainmaker for your company and ensure that your company gets funded and becomes successful.

Surround yourself with smart people

Starting a company can be scary.  If you haven't done it before, there are many things you simply won't know how to do.  That's okay.  You're probably only a few phone calls or mouse clicks away from the answer.  That's why it is so important to surround yourself with smart people, and build that network.  This doesn't mean that as soon as you have over 500 LinkedIn contacts, or 500 friends on Facebook, that you've succeeded.  Go for quality contacts...people who have been there and done that, then leverage your professional and social networks.

Bootstrapping versus Venture Capital

This is very much a function of the type of product or service you're building, the market you're targeting, how quickly you expect (or want) the company to grow, and its total upside potential.  It's also a function of the type of company *you* want to build.  Since there are so many variables here, it's very hard to generalize.  If you're starting a company that is more of a "lifestyle" company, e.g., one that probably won't see a "hockey-stick" growth curve into millions in the first few years, then you're pretty-much stuck with bootstrapping, simply because you will have a difficult time finding an investor who will invest in a company with minimal upside for him/her, plus investors like to see clear exits.  But, sometimes there's nothing wrong with bootstrapping...you get to keep most of the company (instead of giving much of it away to investors) and you get to run it the way you want to (instead of being run by the investors via the Board).  On the other hand, if your product/service is one that must get out on the market fast to "catch that wave," or its a land-grab, then going the slow-growth route will most likely kill the company.

Time doesn't stand still while you're developing your product!

When making a development plan for your product/service, it's easy to think that for everyone else, time stands still.  I see a present need for a product.  It will take me 3 years to fully develop the product and be ready to sell it.  Gosh, what will life be like in 3 years?  Will there still be a need for my product?  Will it be solved another way by then?  Or will the problem simply go away, lose favor, no longer be in vogue?  Will a competitor have solved the problem by then?  If only we knew.  So, try to keep your development cycle short by perhaps coming up with a simpler version of the product, or outsourcing some of the work, etc.  Being paranoid will save you here...being ignorant or dismissive might kill your company.

My standard is better than your standard

Here I'm referring to a communication standard, or a set of rules that define how a signal is composed and communicated.  Many exist, such as Blue-ray, IEEE 802.11n, USB 3.0, Bluetooth, etc.  These standards have been defined by a committee of persons, usually from several organizations, or sometimes by a large organization pushing its particular approach or IP.  Since every company has an opinion on the make-up of such standard, it will most likely not be optimal for any one case or for everyone.  The saying goes something like "A camel is a horse designed by committee."  And it can be a huge turf war between large companies, too, like VHS versus Betamax, CDMA versus GSM, and Blue-Ray versus HD-DVD.  So, why am I bringing this all up?  Well, this opens the door for a new company to define a "race horse"...a better, more streamlined standard that does the job better.  However, many have tried, and few have succeeded.  But the failure didn't come when defining the better standard...that's the easy part.  The tough part is getting it accepted in the industry.  Whether you try to get your better standard endorsed by a standards body such as IEEE, or by a potential customer/partner, the resounding questions from them will be "And who are you?  How big are you?  How do I know you'll be around next year?"  A true David-and-Goliath problem if you're a start-up.

So if you're considering defining the next wireless isochronous multimedia communication protocol, or the next DVD format, or the next Body-Area Net standard, and your company is made up of two guys and a dog, think twice about how you're going to market this standard to get it widely accepted and embraced by your partners and customers.  Like I said in a previous post, knowing the right people is a huge component of a successful start-up, and it is absolutely essential in this situation.

The requirements of a successful start-up

After watching many start-up companies succeed or fail, I've come to the realization that the requirements of a successful start-up company these days are: 1) solid management having a great network of relationships and contacts, 2) luck/timing, and 3) a darn good product.  Expanding these a bit:  1) People solve problems.  People buy products/services.  People tell others about your product/service.  The broader your reach into your industry, and your market, the better you will be able to solve your problems and sell your products.  2)  You have to admit, timing is critical.  Hitting that market window is critical.  And in this is some degree of luck, which none of us can control.  And finally, 3) you have to have a product that has sizzle...that compels users/customers.

Build, not burn those bridges

The entrepreneurial world can be quite small sometimes, and it's very important to build relationships in it.  These relationships become the foundation and resource for solving problems that your company eventually encounters, whether it's raising money, finding a strategic partner, or finding a key employee.  A large component of a company's ultimate success stems from its relationships.  And in this ever-increasing world of social networking, it's essential that these relationships are maintained and never burned.  If you don't like the fact that a VC kicked you out after just 10 minutes, or will only offer you ugly terms, or whatever, just walk.  Don't retaliate.  Keep that relationship, because you might need him in the next company you start.  Or, he might be contacted by another VC you're pitching, and you need that positive reference.  Same goes for relationships with employees, employers, business partners, etc.  Do you have a particular experience you'd like to share here?