Start Smart: Positioning Your Software Venture for Success (v2)

Start Smart
Positioning Your Software Venture for Success

http://sixteenventures.com

Alternate Title...

http://sixteenventures.com @16v on Twitter

Stop Coding
Put Down the Keyboard and Do the Hard Stuff First!


Agenda

• Pre-Game Prep

• Idea Due Diligence

• Technical Resource Engagement

• Raising Capital

• Missing Pieces


Ideas = $0.10/dozen
• ideas don’t matter; execution does

• people won’t steal your ideas

• you need feedback from others


Pre-Game Prep
mental

• Focus

• Failure IS an Option

• Fear

• Motivation


Pre-Game Prep
organizational

• Equity

• Software Ventures 101

• Does the Founder need to be a Programmer?


Pre-Game Prep
business

• Revenue Model

• Technology Has ZERO Value



Focus
• One Venture at a Time

• Don’t be greedy

• Don’t “hedge your bets”

• but <<famous entrepreneur>> has six ventures
going at one time

• he’s famous for a reason; you aren’t. Don’t worry
about what he is doing. Besides, he has people.

Mental Prep


Failure IS an Option
• Nobody wants to fail but you must know it is possible

• don’t let the fear of failure keep you from trying

• If you do fail, fail fast

• do the “hard work” early to avoid failure later

• do not hold onto an idea that won’t work

Mental Prep


Fear is Okay
• without fear, you lose focus

• lack of fear breeds sloppiness

• fear is a very personal word, and at this point in your
venture, it is personal

Mental Prep


Motivation

• Desperation is the wrong reason to start a
business, especially a product-based business

• Looking for an “out”

• Consider Service-oriented business rather than a
product-based company

Mental Prep


Equity
• Understanding It; it is much more complex
than you think
• Two-Sides to the story
• Until you are ready to engage proper legal
counsel, you are not ready to discuss equity

Org Prep


Equity
your perspective

• Equity is NOT currency

• you are too early to be dealing in equity positions

• hold onto as much as possible for as long as
possible (this is not greed)

• entrepreneurs often feel like those they bring in
“need some skin in the game” as if that will get
more out of them

• pay cash whenever possible; it will save you money
in the long-run
Org Prep


Equity
their perspective

• you are asking them to invest in your venture

• equity only pays on exit or buy-back

• without control as well as equity, they are at the
mercy of your performance or whims

• cash is king


Software Ventures 101

• ISV deﬁned
• On Premises vs. On Demand
• If its on the web, its a software venture,
right?
• Growth vs. Lifestyle
Org Prep


Founding Programmer?

• Not required
• Should be technical (or willing to learn)
• should not learn to program
• focus on the business
• you wouldn’t learn to weld just because you
wanted to open a body shop

Org Prep


Early Team Members

• Be Cautious
• Attorney
• Advisor(y board)
• Board of Directors?

Org Prep


Revenue Model
• what is a revenue model?

• 7 different ways to make money

• do startup software ventures need to have a
revenue model?

• You can’t know what revenue model(s) to choose at
this stage in the game, but you MUST be thinking
about it

Biz Prep


Revenue Streams

Biz Prep


Technology = 0 Value
• the fact that you use Ruby on Rails or Java
to build your app means nothing
• Postgres vs. MySQL? Who cares
• Ajax UI? Android client? Nothing!
• Solved a problem? Aha! Now we’re onto
something

Biz Prep

Idea Due Diligence
• Goal: determine if the idea is a good idea,
or a good business
• Ideal Idea
• Validation
• Detailing your Vision
• Presenting your Vision

Ideal Idea
• It Solves a Real Problem in a Low-tech, fragmented
vertical market, with few relevant competitors and a
proven business model

• Deviating from this rule increases chance of failure

• Adhering to the rule does not guarantee success

• Whole Product Solution, not just a Feature

• No “Me Too” products just to be “in the market”

• Avoids “commodity pricing” by not just solving the
pain, but doing it in a *great* way

Market Validation

• is there a market for the product/service?

• Primary vs. Secondary Market Research

• Target Market Identiﬁcation

• Competitive Research

• Sustainable Competitive Advantage

• Talking to Potential Users

• You Must Be Present to Win


Detailing Your Vision

• Extract it from your brain

• put it into a format that other people can make
sense of

• screen mockups, process ﬂows, etc.

• You are not a Product Manager... forget UML, Req.
Docs, etc... just draw pictures!

• use this to get feedback, engage technical
resources, and/or raise capital


Presenting Your Vision

• Show trusted advisors, colleagues, friends,
and family your vision drawing
• make sure that they “get it” immediately
from your drawings... if they don’t, reﬁne
• determine minimum features required for
version 1.0


Technical Resource Engagement

• Partner, Employee, Consultant or Software
Development Firm

• Protect your Intellectual Property (IP)

• Build vs. Buy

• Hosting / Platforms and Architecture

• Beware “Bet Your Business” Decisions


Raising Capital

• Bootstrapping

• Go-to-Market vs. Raise Money

• Money Talks

• Choosing Investors

• Formal Business Plan

• Exit Strategy


Until Someone Pays You, Its Just an Idea


Start Smart: Positioning Your Software Venture for Success (v2)

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