Just the high-level lessons... I didn't want to transcribe all my notes

People matter

• Take the A team with the B idea, rather than the B team with the A idea
• Top 20% of people at company produce 80% of output: find and learn from them
• Hire people smarter than you
• Experience matters
  • To get startup experience, work for a startup
• Passion matters (work without pay)
• Traditionally: numbers are hard, people are soft
  • Ed says reverse: the type of people are important, numbers can change
• Networking, contacts: hire someone you know, or a stranger?

Context matters: do your research

• Political, social, economical: in a boom or recession?
• Type of market & competitors

Product matters

• Talk to customers: make sure there is a need
• Lots of startups had an idea, made a product... then tried to find customers (and found none)
• Elevator speech: 30 second talk you give to a CEO when you meet them in the elevator. What your product is, and why they need it.

Integrity matters

• Key ingredient to successful business
• Customer/employee/partner trust hard to build, easy to break
• Bluffing is a dangerous game
• Keep committments
• All about credibility: invest in people

Licensing

• Siren's call: seems easy, but very hard to succeed (Simple, right? You have idea, partner company does everything else. Nope.)
• Live by the sword, die by the sword

Negotiations

• There is wiggle room in the first offer
• Integrity
• Always follow up -- keep stream of contact going

Success factors

• Asses what got you to your current point: don't change those core values

Marketing and Sales

• Not the same: marketing is how to make it easy to sell
• Proper incentives... To retain customers? To maintain relationships? To be trustworthy?
• Marketing 101: understand target customer, determine applications, get right product (value proposition in absence of pricing)
• Marketing 102: given above, what is pricing and sales channel? Need right value prop.
• Don't like sales? Well, key job of entrepreneur is to be selling all the time
  • Pitch idea, get the best people
  • Full time negotiator
  • Do deals to get what you need
  • Learn to deal with rejection
• Don't give things away for free, or customer won't take seriously
  • If it's free how good can it be?
  • Customer has idea of getting what they paid for
  • Charge the value to the customer

Quotables

• Will the dogs eat the dog food?
  • Also: will the dogs buy the dog food?
• Horse worth riding in a race worth winning
• Buy low, sell high
• Collect early, pay late
• Stuff happens. Have a backup/alternative.
• Better than being poked in the eye with a sharp stick.
  • i.e., There are worse things than having your stock bought out for "only" $10M

Thurs 9/12: Princeton Power Systems

Good features

• Technology: advanced, patented, lots of applications
• Product: existing need/demand, cost advantages, low risk
• Future products: may be a big idea (distributed generation)
• Low overhead: planning to partner, low pay? Low $ requirement to succeed

Questions

• Competitors: who? what? how? market size? how strong... is there opportunity?
• Who is the team? Experience, how critical is each member?
• How sustainable is advantage? Other companies doing same? Barriers to entry
• Customers and revenue? (who? volume?)
• Financial model -- how paid for?
• Product roadmap

How?

• People key to company (-Lack of experience, lack of contacts)
• Cash: how much, from whom?
• Execution: manufacturing (outsourcing to whom?)
  • Sell to OEM (original equipment manufacturer), like Intel sells to Dell
• Leverage assets: use others' resources
  • Use OEM's sales, marketing; don't need large sales force

What?

• Patent rights: term/duration of protection, what are the claims
  • Does patent really help small company? Can they sue? Lawyers?
• Long-term opportunity/plan; maintain competitive advantage
• Focus: decide what to do, tech/product focus and market focus

Investors: need return! How to do this if private, no dividends, etc. Need some plan for investors to get money.

Talk on 12/10/02

The candy game

Follow your passion

Align with success

It's YOUR career

Final lecture 12/12/02