Lean Start-up Business Tactics - Start-up Infrastructure on a Budget

Guerilla Startups
Marc Sedam
Executive Director, UNHInnovation
marc.sedam@unh.edu
© 2014 University of New Hampshire | innovation.unh.edu

Today’s Goal
• Walk through the inspiration of your idea
through the operation of your company
spending as little money as possible
• Assumes you want to scale your
company beyond a few people
© 2014 University of New Hampshire | innovation.unh.edu2

Caveat/ Call to Action
• These are my experiences
• If you have something more recent and
better, jump up and tell the tale

Ohmygodohmygodohmygod
… I have an idea!
• Do I call a lawyer?
– No.
• But it’s an excellent idea!
– No.
• You don’t like me, do you?
– Just trying to save you some heartache.
• Fine.
– We can still be friends…

Friends suggest friends use Google
• Search for your idea
• Search again
• Ask a friend to search for you too
• Write down all of the places your idea has
applications and search them
• If you haven’t searched on your idea for at
least 8 hours, do so

No search hits. I’m a millionaire!
• Maybe
• Next stop. Find some customers.
• Buy the book Business Model Generation
and figure out your business model
canvas

Currently $19.74 on Amazon

Why?
• Excellent overview of defining your idea in
terms of value, customers, channels,
costs, and opportunity
• Requires talking with customers (I
recommend at least 100) to ensure you
have it right
• I would have saved over $3MM using this
book in my last startup

Actually, I can’t even build it
• Elance.com
– Freelancers from around the world
– Access to talent base
– You post price you can pay and freelancers
bid for the work

So, it’s a go! Let’s incorporate
• Do it yourself
– http://www.sos.nh.gov/corporate/PDF/Form_11_V
-1.0.pdf
– $100
• Many of the coming suggestions will require
an EIN and therefore incorporation
– http://www.irs.gov/Businesses/Small-Businesses-
&-Self-Employed/Employer-ID-Numbers-EINs
• No you don’t have to

Where do I work?
• Have you considered the new, refreshed,
improved, and growing abiHUB?
• Co-working spaces are a great value
– Free internet
– Professional business help
– Possible customers (don’t be tacky)
– $50-$150/month depending on needs

Productivity Software
• OpenOffice
– Free desktop productivity software
– Compatible with MS Office
• Google Docs
• Apple
– Free with devices

And then there’s Microsoft Office
• As cheap as $70/yr
• Still has 85% of the market (Forrester)
• If you’re sharing docs, proposals,
contracts, you pretty much need to use
MS Office
– Track changes feature alone saves hours

CRM-Keeping track of Customers
• Salesforce.com
– $30-50/month
– Integrated very well with MS Office
– Mobile app is awesome
• SugarCRM
• ZohoCRM
– Google compatible

CRMs
• Allows you to save and collate
– Contacts
– Opportunities
– Communications
– Leads
• You can’t afford not to have one
• If web-based, make sure you port the data to
your desktop at least monthly
– If you don’t pay, you don’t get your data!

Back-office
• Surprising savings can be found on
telecommunications services
– Broadband.com: competitive shopping for
broadband services
– Phonebooth.com: provides scaleable land-
lines and virtual PBX
– Bandwidth.com: coordinates broadband and
telco services, including mobile phones

They’re all the same company
• These services can make you look like a
large company (auto attendants, call
forwarding, etc) without the cost

Back-office: Storage
• Google Drive
• Microsoft SkyDrive
• Amazon AWS
• TB-level storage is now dirt cheap
• Services like Box, DropBox, and Drive
give nearly unlimited storage for a few
bucks/month

Accounting Software
• Quickbooks
– Starts at $250/yr
– Most common software and most bookkeepers
are already trained
• Peachtree
• Many other small ones
• Make sure you can invoice, do POs, and
1099s out of your accounting software
otherwise it’s useless

Why do you need accounting
software?
• To play vendor roulette
• Get multiple vendors early (at least 3)
• Rotate from whom you order
– Pay everyone on time for the first three
months
– Then switch everyone to Net 90-120
– Vendors float your operating costs while you
use the money to acquire customers

Office Equipment
• Believe it or not, it’s cheaper to purchase
things than rent them
– Copiers
– Coffee makers
– Computers
• Buy them when you can
• Shop BJs or Costco to get consumables

Professional Services
• Many service firms will staff your company on
a part-time basis as-needed
– Accounting
– HR
– Insurance needs
• Frequently years before companies need FT
people in these roles
• You don’t need an audit in the early stages
– Solid bookkeeper is fine
– Audits can be $25k

Let’s Talk Lawyers
• Most corporate lawyers understand that you
don’t have money
– But don’t lead every conversation with “You’re not
billing me for this, are you?”
• Give a budget and have reasonable
expectations of them
• It’s not their job to afford you as a customer,
it’s your job to afford their counsel

Patent Lawyers
• Tip! Patent lawyers don’t like it when you
share your idea and have nothing else to
say
• The expense comes from you putting the
burden on them to describe the idea

A patent application is like your high
school laboratory report
• Abstract
• Background
• Materials and Methods
• Results
• Conclusion
– In patent-speak these are the claims
– Let your attorney do these

If you do your part
• Can file a solid patent application for between
$2,000-$4,000
• You want the attorney to spend at least 5
hours reviewing and “patentizing” your work
• Pay them for their expertise, not to be your
“invention whisperer”
• Sorry if you’re a lawyer and I just cost you
some dough

Healthcare
• Whether you like it or not, Obamacare has
done a lot of the work for you
• Give your employees (including you)
healthcare coverage, it makes them loyal
• You can manage healthcare costs with
your outsourced HC rep

2007-2011
• Annual average HC cost increase: 24%
• Our HC cost increase: 3% total
• Every year we looked at all coverage
– Adjusted premiums up and down
– Negotiated around the demographics of the
company
• 5’s and 0’s
– Frequently traded expenses across coverage
types with employee permission

Spending Money
• Never ever use your personal credit card
• Get a bank card that has a rewards
system you can use to buy stuff
– Use the points to reward staff, the office, or
yourself, and buy things you wouldn’t
otherwise
– Thank you gift cards

Taking in Money
• Square
– Changed retail commerce
– Low monthly fee
– Low per swipe fee
– Hooks up to smartphone/tablet
– Get your money today
– Coordinates with most accounting software
and some CRMs

Why Should you Use an Email Service?
• Looks professional
• If you use your own account you risk being flagged as a spammer
• Automated
– Unsubscribe options auto-remove uninterested contacts
– List segmentation (Send to all contacts who didn’t open that last email)
• Analytics
– Know exactly who opened and clicked each email
• Custom design emails to appeal to your target audience
• Integrations with other services (EventBrite, Salesforce, etc…)
• It’s doesn’t have to be expensive!

Low Cost Email Marketing Options
Features in lowest cost option
MailChimp ReachMail.net Contant Contact GetResponse
Lowest cost option Free Free $20/mo. $15/mo.
Contacts 2000 5000 500 1000
Emails/month 12,000 15,000 Unlimited Unlimited
Remove their logo from
your footer
No (must have
paid account)
No (must have
paid account
Yes Yes
Tracking/Analytics/Rep
orting
Yes Yes Yes Yes
Email Scheduling Yes Yes Yes Yes

Additional Features to Consider
Features in lowest cost option
MailChimp ReachMail.net Constant Contact GetResponse
Autoresponder – Auto
email new subscribers,
etc…
Not available for
free
Yes Yes, but limited to
one campaign per
account
Yes. Unlimited
campaigns
Responsive email
design templates
Yes Not great Yes Yes
Delivery by time-zone No No Yes Yes
Templates Yes Yes Yes Yes
Event Management No, but free
EventBrite
integration
No Extra $ for this
feature
No
Surveys Simple polls or
SurveyMonkey
Integration
Yes No. Extra $ for this
feature
Yes
Responsive email
design
Yes No Yes Yes

• Pros
– Free-for-life option has almost any feature you would want
– Customizable emails with no coding experience necessary
(no access to full html though which can be annoying)
– Image hosting with free version
– A/B split testing
• Cons
– Need a paid version for unlimited emails/month
– Only offers email customer support
– Free version requires their logo in your footers
Scalability: 10,000 subscribers and
unlimited emails/mo. = $75/mo.

• Pros
– Most generous free-for-life option
– Full featured free version
• Free version offers autoresponders which MailChimp does not
– A/B split testing
– Full HTML is editable
– Image hosting with free version
• Cons
– Email designer is not as intuitive and user friendly
– Less well known (this often means there are less integration
options being developed)
– Not great responsive design (for mobile)
70,000 emails/mo. = $40/mo.

• Pros
– 60 day free trail
– Most well known email marketing service
– Good customer support
• Cons
– Must purchase the additional advanced features on top of the
more expensive plan
– Only 1 signup form per account
– No free-for-life options
– The military blacklists Constant Contact emails
– Very limited image hosting (you can’t even buy more…even the
other free services offer that)
– No A/B split testing
unlimited emails/mo. = $110/mo.

• Pros
– Emails are very customizable
– Easy to use
– Responsive design
– Lots of integrations to other services
– Inbox preview
– All features available in all paid versions
– Image hosting
– Full HTML is editable
• Cons
– No free-for-life version
– Some delay in importing large lists (they have to approve the list)
Scalability: 10,000 subscribers
and unlimited emails/mo. =
$65/mo.

Other Email Services
• Other free options
– Mad Mimi
– Active Campaign
• Paid services
– iContact
– Aweber
– Steam Send (unlimited subscribers, pay by
emails/mo.)
– Benchmark
– VerticalResponse

Inexpensive Ways to Build your Email List
• Post “Join Our Email List” links (all email services
have this integration) on your website
• Ask attendees to preregister for events (try
EventBrite, it’s free!) and require an email
• Sign-up sheets at your events

Inexpensive Ways to Build your Email List
• Collect email addresses at tradeshows/events
• Include “Share with a Friend” links on your
emails and make sure your emails have a
“Subscribe” link too
• Promote free content (should be useful to your
audience) on social media and require an email
for download
– Pre-recorded webinars
– Slide decks
– E-books

Let’s talk about events!
• Hosting an event is a spectacular way to
find your target audience
– Like, say, the UNHInnovation Catalyst
Seminar?
– Inexpensive customer acquisition
• It’s like a reverse tradeshow
– All about you
– People who come self-select

How inexpensive?
• Host a good event
• Invite guest speakers to share and make you
look smarter, for free
• Free food and drinks
• Door prizes are popular
– $299 iPad mini gets people in the door
• If the cost of hosting the event is below the
cost of finding one good customer it’s worth it

Inexpensive Event Management
1. Create an event webpage
a. No coding necessary, easy to use
b. Webpage has registration and payment
forms
2. Promote the event
a. Push webpage link out on Twitter, Facebook,
email (Integrates with MailChimp)

Inexpensive Event Management
3. Manage the event
a. See registrants
b. Print name tags
c. Capture/export attendee lists
d. Analytics (Page views, traffic sources,
Google Analytic integration)
e. Mobile apps for checking people in and
paying at the door

EventBrite Pricing
• Free to sign up and maintain an account
• Organizing a free event?
– All free!
– Registration is a great way to capture new emails
• Collecting money for your event?
– They take 2.5% of ticket value + $.99/ticket sold
– For credit card processing – add additional 3% of
ticket value
– Alternatively use Pay-Pal for payment

Since we’re here, let’s talk about
tradeshows
• Do a tradeshow if:
– All your customers go
– You have something specific to say
– You bring tchotchkes!
• Don’t do a tradeshow if:
– You’re guessing about the market
– You think you “have to”
– To be seen
– You don’t have the money to look impressive

Secret of tradeshow “gifts”
• Always sift through the business cards to
select the winner from customers you want
to acquire
– Then “randomly” pick
• Corollary: don’t waste your card on
someone from whom you won’t buy stuff

Travel
• Good travel apps
– TripIt: email travel specifics and it auto-
generates an itinerary; $50 Pro version lets
you share itineraries with whole company
– Uber: because calling a taxi is now awesome
– MetrO: public transport maps/directions for
most major cities

Airlines
• Stick to one airline to rack up miles
– Many airlines have separate “corporate” programs
that are separate rewards
– Two rewards for one trip
• Searching for airfare
– Kayak: great search engine; better than your airline’s
because it will identify cheapest flights
– Hipmunk: more graphics friendly UI
• “Pain” is a search choice
– SeatGuru gives you the quality of every seat on every
airline

Hotwire.com
• Save 40-70% on hotels and cars
– Don’t know vendor, just price
– For hotels you know general location
• When you use enough you get invited to
“hotwire express” which lets you change
itineraries

Other good lodging apps
• Hotel Tonight
– Only book after noon in local timezone
• Airbnb
– Great savings in big cities
– Generally staying in someone’s house or
apartment

Couple of final suggestions
• Decide what “ecosystem” you plan to use and
stick with it
– Apple
– Microsoft
– Google
– Hodgepodge
• Pick all of your other solutions in this
presentation around which ecosystem saves
you the most time or money long-term

Final, final suggestion
• Spend the money like it’s yours, even
when it’s someone else’s
• Outsource everything until you can afford
to bring it in-house
• Look for non-dilutive cash (grants) any
time you need to build something bigger
than $20,000

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