Startup Guide
- Idea.
Find an idea that you are passionate about and is worthwhile for your next 3 - 5 years. A truly successful startup takes time and sacrifice. Be patient and be practical. Discover what you want to do and do your best. I have discussed some ideas in my blog such as Open Source, Software as Services (SaaS), Vertical Search, Web Services, Location based services, Office 2.0, etc. Maybe one of them is helpful to you.
- Business Opportunity Assessment.
Consider the overall market size (both overall market size and addressable market size), margin structure and gross rate. Filter your ideas by these practical business measurement and see which one of your ideas is worthwhile to execute on.
- Team.
Find a good team whom you would like to work with. A good team is the cornerstone of success. I have a blog entry on startup team competence. Think about your idea on what types of expertise you need in order to be successful and extend your network.
- Capital.
First of all, when do you really need external money or should you bootstrap your startup? I have some ideas on that, check out this blog on my view to see if you agree. If you do need money, think about the type of VCs you would like to bring with you on this journey. Getting venture money is like getting into a marriage. Think long term vs short term. You can select VC by firm, their focus or partners themselves. For example, if you are starting a consumer service company, Sequoia, Mayfield, and Redpoint could be good bets because they have funded a lot of the successful companies in the consumer space. You should also read through key investment terms to get your self familiar with the key terms.
- Form strategic relationships.
If you are considering strategic investment vs venture investment, I have several blogs on how you should look at strategic investments: Strategic Investment Structure I, Strategic Investment Structure II. In addition, think about when and how to partner with large corporations. here are some advice.
- Form your corporation.
Pick a reputable law firm and it can help you a great deal in the long run. Just like picking a VC, you really need to know the partner or associate whom you will be working with a lot. Each partner brings their own expertise and rolodex to the equation. For example. John Park from Morgan Lewis is great at hardware/Semi/Korean deals, and Fred Greguras from Fenwick & West is an expert in open source software deals and look closely at China.
- Reserve your domain name.
A cool and easy-to-remember domain name saves you a lot of market money. Get a nice domain name early. GoDaddy can be a good choice for domain name reservations.
- Payroll and Benefits.
Benefits typically include 401(k), group medical, group dental etc. Pick a service provider who is very personable and nice to work with. I would recommend to shop with a broker vs an agent since a broker can look at hundreds of providers and pick the most cost effective plan based on your situation. There are many of these providers out there.
- Get basic utilities ready.
virtual voice mail and fax. Try to setup a separate number from your personal number early so that you can present a professional image when customer and investor can reach you. eVoice from eFax is not bad.
Get your business card ready. Both iPrint and VistaPrint are great resources to get your business cards designed and print out in professional quality.
I will add more when I have more time.
Boundaryfree » Startup guide said,
September 1, 2006 at 5:54 pm
[…] I have a few minutes today, so I decided to put together a startup guide on some of my thoughts and ways to think about creating a startup. I don’t have a lot of time, so this is a first attempt. Let me know if this summarized approach on my blogs is helpful. […]
Vivek said,
October 7, 2006 at 12:53 am
I have often wondered how does a team that wants to discuss a new idea with a prospective investor / domain expert maintain rights to the idea ? Getting every prospective investor or an expert to sign a confidentiality agreement before discussion could become a cumbersome deal.
Ray Wu said,
October 7, 2006 at 2:57 am
First of all, a VC or corporate VC seldom sign an NDA, so it does not work well if you approach them asking for them to sign a confidentiality agreement. If your idea is easily duplicated by someone just hearing it, you are betting on a time lead will get you the success. I actually doubt that will keep you there for long even when you have the first-mover advantage. Look at friendster.com. A true success takes not only a good idea, but more on right execution, team, contacts, business model, channel, partners etc. Moreover, even when you have all that, a large competitor can come in and change the game at a later stage. So it takes a lot of planning. Here is one blog that I did yesterday on some thoughts here: http://blog.boundaryfree.com/archives/88. If I were you, I would not worry about the idea that much. All the entrepreneurs I know think their idea is the best since sliced bread. But that is seldom the case. Try to get as much validation as possible before you start. It is a long journey, so make sure you are on the right path. Good luck.