In this day and age of lean, low-cost, bootstrapped technology startups, it’s easy for founders to ignore the issue of startup capital. Years ago, it was probably the issue given the most attention. Many brick and mortar businesses took $200k or more to start. Even technology startups just 10 years ago would have had to consider initial costs in the hundreds of thousands of dollars.
These days, a dedicated server can cost well less than $100 per month and those leveraging cloud computing can get started usually for less than $50 a month. Open-source software has also lowered costs substantially. Back in the late ’90s, we’d always worry how many database servers we’d need and how much the Oracle licenses would cost us. Remember cost per power units? Today, most startup web businesses don’t have to purchase any server software at all.
It’s no wonder then, that many of today’s startups consider their capital investment at or near $0 and just think about the opportunity costs. My advice is to really consider what your minimal costs are going to be for the first year and fund your company’s checking account with that amount.
Will you need legal services? Incorporation fees (which I’ll address in a later post)? Are you going to run any advertising to promote your business? Planning on doing any give-aways? What will your servers cost you for the first year? Do you need to have some graphic design done for you? Office space? Well… you get the idea. In practice, I’ve found that for businesses that we said would cost “nothing to start”, sans opportunity cost, often can rack up $5,000 to $20,000 pretty quickly.
If you’re not concerned about these numbers, that’s good. Why put the money into a company account, you ask? Because, it forces each co-founder to get serious about the business and put their money where their mouth is. I can’t tell you how many times I’ve witnessed people who claim to be serious about a business, but when it comes time to fund a company that needs $2,000 per co-founder, they decide that they don’t want to move forward. The crazy thing is that often these people were making high 6-digit salaries prior to working on the startup. Somehow, the act of paying the company makes the true sacrifice of startups a bit too real for some. It’s a great test to make sure you’re all on the same page and gives some indication that each is willing to do what’s necessary to make the business a success. Also, it exposes if your founders are really terrible with money. Perhaps they don’t have a few thousand saved up and the company expects to have to go 6 months before funding or some liquidity event. How are they going to pay their living expenses? If they have such poor money-management skills, how are they supposed to manage a business? It’s better to have these kind of founders quit early.
In short, come up with a reasonable number and require that each founder antes up their fair share. It will save you a ton of wasted time in the long run.
Posted in: Austin, Texas, Startups, Technology.
Tagged: funding · how-to · Startups · Technology
After years of business and personal travel, I’ve gone through my fair share of luggage. I’ve coveted the expensive designer luggage from Louis Vuitton, Gucci, and Prada. I’ve purchased cheap stuff from no name brands. I’ve owned lightweight “hiking-like” pieces. And, I’ve built a collection of high quality luggage from Briggs & Riley (which is amazing quality, but quite heavy).
After all this experimentation, I’m really enamored with the lightweight soft backpack from eBags called the Weekender Convertible. Maybe it’s that I’m older, wiser, and happily married, but I no longer care if I look smooth walking through the airport. It took me a while to get over the poor aesthetics of a backpack, but I’m glad I did. First, having it centered on your back keeps you from having one arm tweaked behind you. And, you don’t have to worry about the 3-4 feet behind you anymore. Secondly, most airline staff don’t give your bag a glance. When the overheads are full and they are asking people to check their bags, you can just walk right by with your backpack. Finally, the soft construction means that you can squeeze it into almost any spot. For those times when you collect too much while traveling, it easily expands to fit your new found stuff.
This bag is similar to Rick Steves’ Convertible Carry-On bag. It’s a little bit heavier, but the construction is much better and it has a few more compartments for logically dividing your stuff up. Personally, I think the Rick Steves’ bag is really poorly constructed, even for the low $99.95 price.
So thousands of dollars of luggage later, I think I might have just found the perfect bag. And it costs just $69.99. Go figure…
Posted in: Fashion, Product Review / Recommendation, Random Musings, Travel.
Lately, I’ve been meeting with entrepreneurs in the Austin area and giving them some advice on their startups. I realized that regardless of the company, there is some common advice I tend to give to everyone. This reminded me of when I was interviewed by Steve Spalding of How To Split An Atom, a couple of years ago and was asked the question, “How do you start your own business?” In this post, I’m going to focus on what I believe is the most important issue – choosing your co-founders.
Here was part of my response to Steve’s question:
Found your company with people you really trust, respect, and admire. Your company may outlast the average marriage in the US, so you better be sure these are people you are willing to work with for the long term.
I believe the five most important attributes can be summed up with the acronym: T.A.P.E.D.
- Trust – Trust is the most important criteria for choosing a co-founder. You’re going to be too busy to watch over each other with every move. You need to be able to trust that the person has the right capabilities and the right motivation.
- Adaptability – I like to use the “MacGyver test”. Imagine you guys are stuck on some island where there are some bad guys trying to kill you. Is this the person that can help you defeat the bad guys with nothing more than a Swiss army knife, some scrap wire, and a stick of gum? Startups are challenging in that you’re always resource limited. You need people that can embrace these limitations instead of complain about them. We’ve all worked with people that romanticize the days when they had two executive assistants. Don’t found your company with those people. Work with people that can adapt to any situation and excel.
- Passion – Your co-founders need to be passionate about the space you’re in. It’s not enough that they “just like startups” or see “some upside potential.” There are going to be a lot of bumps in the road. If they don’t love what they are doing and have great passion for solving the business problem, they are likely going to quit when the going gets tough.
- Energy – If you worked with your co-founder in the past, were they the person you’d most likely see at the office at 3AM? Work/life balance is important, but in a startup, you’re going to have to work crazy hours. You just have to. If you went to school with your co-founder, were they enthusiastic about getting stuff done? You can even see a person’s energy in sports and in the gym. Driven people tend to work hard in all aspect of their life. Choose people you know can go the distance with you.
- Differences – While it’s important to share the high-level vision, it’s good to have some differences. Do some research on group think and you’ll see why. Ever wonder why the Space Shuttle Challenger disaster happened? Or how anyone could think the Bay of Pigs was a good idea? Smart people do dumb things, especially when not challenged. Differences lead to creative solutions and help you avoid the pitfalls of group think. It’s good to have these differences. But, it’s important that you don’t spend all your time debating things. Just like a functional family, you need to be able to compromise and move on, once you’ve decided on the correct path.
While I’ve had my fair share of ups and downs in startups, I’ve had great luck with my co-founder. Back when I chose to work with him, I didn’t have all these criteria. I simply trusted and admired him and went with my gut. But I was fortunate enough to have worked with him at a startup for a couple of years, so I really knew him well. If you’re looking to found your startup with someone and don’t have as long of a history with them, do spend the time to analyze if they are the right fit.
Stay tuned for: How to start a technology company – Startup advice, Part 2 “Put your money where your mouth is”
Posted in: Austin, Texas, Startups, Technology.
Tagged: cofounders · how-to · Startups · Technology
I recently purchased a Diesel T-shirt from Nordstrom. It’s a nice printed T so I wanted to be careful when washing it. Reading the fabric care instructions was both confusing and funny.
It seems I can only wear the shirt inside:
EXPOSED TO EXTREME
AMOUNTS
OF SUNLIGHT COLOR
MAY FADE
And the washing instructions:
THIS GARMENT HAS BEEN TREATED IN
ORDER TO GIVE THE FABRIC A
PARTICULAR APPEARANCE AND SPECIAL
CHARACTERISTICS, EXPERIENCE SHOWS
THAT HOMOGENEITY CANNOT BE
GUARANTEED.
THEREFORE IS ABSOLUTELY NATURAL
THAT THE GARMENTS VARY IN
APPARANCE BETWEEN EACH OTHER,
AND VARY IN APPARENCE IN THE TIME. IT
IS ADVISABLE TO WASH THIS GARMENT
SEPARATELY AND NOT EXPOST TO THE
SUNLIGHT AS THERE COULD BE
VARIATION IN COLOR.
THIS PARTICULAR TREATMENT MAKES
THE COLOR NOT STILL
PAY ATTENTION TO THE MATCHING WITH
WHITE GARMENTS
What’s the deal with the crazy line breaks too? Too funny 
Posted in: Annoyances, Fashion, Humor.
Tagged: diesel · Fashion · funny · t-shirt
It has been an amazing ride, but effective today, the Recommendr site has ceased operation.
I’d like to thank everyone who participated in the site and made the site a valuable resource for shoppers. Our developers were fantastic and worked tirelessly to deliver amazing code on schedule. We were amazed by the technical solutions our team developed and the innovative product enhancements and features they thought of. Our legal representation was top notch. We can’t stop raving about the enthusiasm and quality of advice we received from Gunderson Dettmer. If you’re an entrepreneur and need corporate legal representation, you must check them out.
We’ve analyzed what we did right and the mistakes we made, but in the end it comes down to one simple fact – we didn’t build enough critical mass to take the company to the next level. If you’re interested in the social commerce space and would like more information, please feel free to contact me. We’re more than happy to share our learning with other inspired entrepreneurs.
Thanks again,
Eric Goh
Co-founder, Recommendr, Inc.
Posted in: Technology.
Tagged: recommendr · social commerce · social shopping · startup
There are tons of articles and posts about the new Kindle 2 from Amazon.com. Rather than bore you with the same information and my opinion, here are some photos of the size difference between the two versions WITH the cover.
Since many will be carrying the device with the case, this might be a more important comparison than the stand-alone device. The new case is not included with the Kindle 2. So although Amazon positions the device as being the same price, it’s really $29.99 more expensive. That said, this case is real leather and of much higher quality than the included case with the Kindle 1.
Posted in: Technology.
Tagged: amazon · case · comparison · kindle · kindle 2
My family owns a brick and mortar toy store called LearningTower Toys located in Port Jefferson Station. It’s a small town located on Long Island, New York, for those not familiar with the Northeast. The business has been in existence since 1996 and has had a website since 1998. They recently discovered that their business was listed as “Place closed” on Google maps. For obvious reasons, this is not good. I received a call from my mother to assist and here is an overview of what transpired:
- Discovered that the listing had been flagged as “Place Closed”
- I attempted to claim the business using Google maps’ “Add or Edit your Business” feature. I entered in all the relevant information and was prompted to confirm this with a call placed to the phone number on record. Using this feature, an automated Google service called and we entered a PIN to confirm we were the business owner.
- Upon completion, the entry was listed as “pending approval”. It was no longer listed as “place closed,” so I assumed we were in good shape.
- A few hours later, a Google representative called to confirm the listing. This seemed strange since we confirmed with the phone number on file, but they simply asked my mother to confirm the physical address. Unfortunately, with the hustle of the store, my mother didn’t have the time to get a callback number to reach the representative.
- Within minutes, the listing which I took time to correct was listed as “removal requested,” and a new listing was created by Google with errors in the address. It seems the representative didn’t bother checking the content of the other listing and just deleted it. They created a newer listing which was now in the wrong location and had limited data (no url, photos, etc.).
- The new listing wasn’t editable and the old (proper listing) was in the process of deletion and had no option to edit or reactivate.
- My only recourse was to create yet another listing and flag the other two for deletion, citing duplicate entries.
Here is the current listing:
View Larger Map
So finally we have a proper listing in Google Maps. However, Google seems to apply some form of page rank to these listings. We went from the top couple listings on page 1 for “Port Jefferson Toy Store,” to page 3 or 4. This should correct in time, but it’s still quite annoying. The lesson: claim your business now before someone, erroneously or maliciously, deletes or edits your listing.
Add your business to Google Maps
——EDIT 3/37/2009——
The saga continues. The LearningTower Toys map pin in now broken. It’s coming up as “Learning Tower of Pizza” in Ankeny, IA or “Gamestop” in Islandia NY. Very strange.
I was able to locate LearningTower Toys listing but it’s marked as “Place Closed” yet again. Hopefully I’ll have some resolution soon.
View Larger Map
Posted in: Annoyances, Technology.
The Wine & Food Foundation of Texas and the Washington Wine Commission invite you to the 2nd annual Taste Washington, Austin! Hosted by the Hilton Downtown and featuring over 50 Washington vintners and superb cuisine, this is a once-a-year, can’t-miss event. Washington State is a premium wine producing region and is the nation’s second largest wine producer.
Taste Washington, Austin!
Friday, February 20, 2009
Hilton Austin Downtown
500 East 4th Street, Austin, 78701
TRADE: 2:30 P.M. to 5:30 P.M.
PUBLIC: 6:00 P.M. to 9:00 P.M.
Taste Washington, Austin!
I find these events are a fantastic opportunity to do back-to-back tastings and comparisons. Make sure to spit, otherwise it will all taste good. I’ll be there, and you? Drop me a comment or a message on Twitter and I’ll be on the lookout for you.
Twitter
Posted in: Austin, Texas, Food and Wine.
Hello all!
It’s been a multiyear hiatus but I’m in the process of relaunching my blog. I need to update lots of out-of-date content and get a new theme. Stay tuned and thanks for your patience…
Posted in: Random Musings.
