How to Get Professional Assistance When You Can’t Afford It
Some thoughts while preparing for this panel discussion on Tuesday.
First, a little bit about Early Stage IT. We do IT for Early Stage companies. No, not installing machines type of stuff. More like IT strategy and execution, especially web applications. Our positioning is exactly in this space: startups. What attracts me to this space is that it's very dynamic, it attracts a lot of very smart people who are not only smart, but can get things done and make concepts come to life. We started a couple of years ago, and it took a while to get things going — a long dry spell in a lousy economy — but things have started to turn around, and I'm happy about that.
Let me talk first about a failure. It's kind of the right of passage in the startup world, right? We built this web site for helping High School seniors search and apply for scholarships. We built the web site on Google App Engine. I coded most of it, and we had a young woman helping out.
She had dropped out of the workplace about 6 years ago when her second child was born, and now that he was entering kindergarten, she was ready to go back to work. Of course, technology moves on and she needed to polish up her skills. And she still needed to be able to help out in his classroom and be there to meet the school bus, that sort of thing. So we made a deal: I would help her develop her skills and she would do what she could coding-wise.
Sounds wonderful, right? We had made some mistakes in how we structured ourselves — three partners plus a marketing guy working on equity and we just couldn't make a go of it. And there wasn't enough equity there to try and sell it so we're in the process of dissolving it. But within that failure was a big success too. We had a functioning web site that had been built for less than a thousand dollars, partly on Google App Engine, partly on Amazon. We took payments using PayPal, we had a marketing web site built on Drupal Gardens, all of it free.
So lessons learned, and the lessons are these:
- Get good legal help and structure the company in a way that makes it possible to adapt.
- Make sure we're not just a bunch of chiefs, we have a few Indians too.
- Eric Ries talks about validated learning. Validate that you have a market, that if you build it, they actually will come.
- Finally, if I'm going to participate in a cash-free deal, I have to look at it like a VC would. And if you assume that VC's generally know what they're doing, you have to conclude that for us to take part in something, we have to have a pretty firm notion that the likelihood of being backed by someone with money is high.
If you want them because they will help make the company, let me turn the question around: if you could get professional assistance from someone without paying a lot of money, would you take it? My bet is, you wouldn't. You'd wonder why it was so inexpensive. You'd wonder if you were being sold a bill of goods. You'd wonder if the person was going to just steal your idea. The bottom line is, you want someone you can trust. You want someone who is as good in their field as you are in yours. In other words, this relationship has to be based on trust and mutual respect. That's the key ingredient and if that's missing, you don't want that person.
There are a lot of areas where you can save money. In today's technology environment, with Cloud Computing and open source software and NoSQL databases, the cost to actually develop something is not the barrier. The barrier is how you identify who the buyers will be, how you will sell to them, what exactly do they want, what are your barriers to entry, what is your value proposition, etc. Those are the critical elements that will determine your success.
So is there no other way to get key talent? Sure there is, but it is hard. It is harder than raising money from an investor. You have two tools: First, the vision. Not just that you can make money. Some people are motivated solely by money, others want to see a purpose in what they're doing. If you can share that purpose, that mission, then that is your reason to collaborate in making it happen. If they do not share that vision, the other tool is the promise of future money. To assemble the right founding team, you need five things:
- Trust - you must absolutely trust this person
- Ability - they must have the key skills you need at formation time
- Available - the best people are usually not available...they are busy doing other things
- Desire - they must share your vision and desire to see it happen
- Commitment - they must be willing to work for free until you can get funding