Tidbits of Advice from a Budding Entrepreneur - #9

#9 - How can I be sure someone else is not working on the same idea I am right now?





What do you guys think? Have you worked on an idea and then found out that someone else had a similar one? Did it bum you out? Did you give up after finding out?

Look forward to hearing your thoughts.

See previous tidbits here - #8, #7, #6, #5, #4, #3, #2, #1

Cheers,
Andre
http://andrecharoo.com

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Tidbits of Advice from a Budding Entrepreneur - #8

# 8 - What tips do you have on writing a business plan? When you should you typically write it?



Check out a recent post I wrote with some supporting arguments about when the right time is to write a business plan.

What has been your experience? At what point do you think is the best time is to write a comprehensive business plan?

See previous tidbits here - #7, #6, #5, #4, #3, #2, #1

Cheers,
Andre
http://andrecharoo.com

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Blog || http://andrecharoo.com

Tidbits of Advice from a Budding Entrepreneur - #7

#7 - How should I craft my pitch if I don't have a product yet? Should I even pitch my idea before building my product?



What do you guys think? Have you pitched an idea to investors before building a product? What was your feedback? What was your experience?

See previous tidbits here - #6, #5, #4, #3, #2, #1

Cheers,
Andre
http://andrecharoo.com

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Blog || http://andrecharoo.com

Tidbits of Advice from a Budding Entrepreneur - #6

#6 - You've got no money. How do you go about raising financing for you idea?



Some people feel that they shouldn't involve their friends and family, especially family with their business endeavors. What do you think?

See previous tidbits here - #5, #4, #3, #2, #1

Cheers,
Andre
http://andrecharoo.com

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Blog || http://andrecharoo.com

Tidbits of Advice from a Budding Entrepreneur - #5

#5 - How should I divide up my company? Is there a criteria I should use?

Cheers,
Andre
http://andrecharoo.com

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Blog || http://andrecharoo.com

Tidbits of Advice from a Budding Entrepreneur - #4

#4 - How do you form an early-stage startup team? How do you attract co-founders / team members?

Cheers,
Andre
http://andrecharoo.com

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Blog || http://andrecharoo.com

Tidbits of Advice from a Budding Entrepreneur - #3

#3 - What's the difference between success and failure?



What's your take? Do you think there's a major difference between those who succeed and those who don't?

Cheers,
Andre
http://andrecharoo.com

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Blog || http://andrecharoo.com

Tidbits of Advice from a Budding Entrepreneur - #2

#2 - What are the first steps you should do when you have a great idea?

See Tidbit #1 here.

Cheers,
Andre
http://andrecharoo.com

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Blog || http://andrecharoo.com

Tidbits of Advice from a Budding Entrepreneur - #1

Here is the beginning of a series of video posts where I will share some inspiring tidbits of advice.

#1 - Be Uncomfortable

Don't Write a Business Plan First

As a former investment banker turned internet entrepreneur, the first thing I did when I decided to start my company was make an outline for my business plan. I was used to writing offering memoranda back in banking, so I was excited about the process and was ready to make it thorough. Well, thorough it was. It ended up being 46 pages long (just shy of 26-36 pages longer than anyone wanted to read) and the financial model was around 10 tabs strong (just also shy of 9 tabs longer than anyone wanted to analyze). I didn't really know this superfluous length was a concern though. Instead, I felt like I covered our entire basis.

Armed with a comprehensive business plan, I was ready to enter the world and raise some money on the idea. I sent it out to all of my wealthy friends from my banking days and even a few childhood friends to take a look at it. A few got back to me. However, bottom line -- we didn't raise a dime! It wasn't until nearly 9 months later that we raised some financing. How? It definitely wasn't because of the business plan. It was because we completed a prototype with users. That was the key.

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Advice -- build a prototype of your idea immediately. Don't get caught up with the business plan for now. Get some people using it and test to see if they would use it or not.

The Founder of The Founder Institute tweeted:





The key is to always focus on the product. It's the single most important thing you can do in the early days of establishing your company.

***

There is a time for writing the business plan and this should be when you've figured things out and know that this is definitely the direction in which the business will go.

The reason my business plan ultimately didn't work was because it wasn't based on anything but an idea. A business plan should be based on a business. A prototype / product should be based on an idea. At the beginning, since you don't even know if people are going to use your product (i.e., buy into your idea), it doesn't make sense to fabricate the business (i.e., write a business plan) for it.

Serial entrepreneur Wil Schroter of Go BIG Network also wrote a blog post a month ago entitled "Get Customers First and Then Write a Business Plan" that was very much in line with my experience and point of view as it relates to Business Plans and Startups. (Note: This is a link to my blog as I could not find Wil's blog post on his blog. Wil - I have reached out to you via email to see if you were cool with me posting your blog as a guest post on mine. I hope you don't mind ;))

Contrary to what Mark Suster, General Partner at GRP Partners (who btw, I respect and recently enjoyed watching his interview with Jason Calacanis on This Week in Startups), wrote in his post entitled "Are Business Plans Still Necessary?", I would go as far as to say that even modeling out the opportunity extensively (key word: extensively) at the idea stage is somewhat a waste of time. You can build an impressive model based on seemingly realistic assumptions that shows a great output, however, if no one is willing to pay the price that you've based your model on, then the effort is pointless at the end of the day. Now, please don't me wrong. I believe there's a time to build a comprehensive model as well. You should know that the market opportunity you're going after is a big one in general, however, this should be figured out at the idea stage (I suggest how to do this below).

I ended up changing my business three times (read story here), with the third finally slated to gain the traction we are looking for. Why? Because we have a real product based on real users.

Conclusion:

Step 1: Have an idea? Flesh it out with as many smart friends, family, mentors, etc. that you know. Understand the market opportunity and fundamental economics that you're going after.

Step 2: Build a prototype and get friends and family / early users to test drive it and see if they would use what you created. Ask for a range in which they would pay for it.

Step 3: Once you've figured out which product they really like (as you will undoubtedly have to iterate upon and change a couple of times), then write your business plan and build your comprehensive model.

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Mark Suster -- I just wanted to say, in general, I agree with your viewpoint, however, especially for consumer internet plays, I believe that a business plan / model should be timed appropriately, and I think that it should be completed after a prototype has been built and vetted.

***

What do you think?

Cheers,

Andre
http://andrecharoo.com

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Blog || http://andrecharoo.com

Wil Schroter's Blog Post: Get Customers First and Then Write a Business Plan

THIS IS A BLOG POST BY SERIAL ENTREPRENEUR WIL SCHROTER, FOUNDER OF GO BIG NETWORK THAT I COULD NOT FIND THE LINK TO ON HIS BLOG AND THEREFORE, PASTED BELOW FROM MY RSS FEED.

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Note to Wil -- I sent you an email to see if you would be cool with me posting this article on my blog. I hope you don't mind. I thought it was a great post!
***

If you’re thinking about starting a company, please don’t write a business plan. Stop, put the keyboard down, and step back. You’re wasting valuable time.

Don’t get me wrong, I’m not suggesting that you run aimlessly into the startup abyss. What I want you to avoid is the black hole of planning that most entrepreneurs get into when starting a company. They get sucked into a time warp where a formerly great idea gives way to months upon months of “thinking” about the idea instead of just making the damn thing happen.

If Nobody Buys, it’s Not a Business

The first step, before writing a plan, is to validate the concept. If nobody will ever buy your product, it’s unlikely that a business is ever going to form. Focusing on the product first, and more specifically the customer’s willingness to buy that product, is by far the most valuable time you can spend early in your business.

In addition to validating your concept, selling the product early allows you to prove some key assumptions in your plan before you begin writing it. For example, wouldn’t it be helpful to know what someone would pay for your product before you built it? You would be surprised how much information you can gather from potential customers just by asking them what they would pay for a hypothetical product. “If you build it, they will come” might have worked for Kevin Costner in the movie Field of Dreams, but it’s a formula for disaster in a startup.

The Prototype Company

Sometimes finding out early that your idea isn’t as viable as you thought is a blessing. Instead of spending months writing an elaborate business plan on a completely unproven idea, try putting together a “pre-business plan” that consists of only about five pages that quickly communicates your idea and focuses on the key assumptions that drive your business. These key assumptions are often questions like “Will people buy the product as I’ve defined it?”, or “what will they pay?”, or “how much would it cost me to sell this product?”.

Imagine that the first few months of your business are really more like a great big “prototype company”. Focusing strictly on the sale of the product and proving your assumptions, even on a small scale, will allow you to write a far more comprehensive and viable business plan when you are ready to formalize your thoughts. Additionally, you will be able to make much more accurate forecasts on the business when you get a sense for what it really takes to market, sell and deliver the product.

Your Business Plan is Not an Application for Capital

It’s a common misconception that investors want to see a business plan before they will consider investing in a concept. That’s not entirely true. What investors want to see is that you can demonstrate your ability to sell the product to paying customers. Ask anyone (even yourself) who you would rather invest in – a startup company that is making money without a plan or a business plan that isn’t making any money? Writing long, elaborate papers might have impressed your instructors back in college but it won’t win you any points with investors. They want results, not ideas.

Keep the Plan Simple (and listen!)

Despite what you may have heard, most of the best business plans are as simple as possible. It’s far more important for you to demonstrate that you can solve one market need incredibly well than being able to show you’ve thought of every possible market niche and have included it in your plan. Think quality over quantity.

The process of writing your business plan isn’t to show off how much you know about a concept. The most important aspect of writing your plan is to become a voracious listener. Listen to what your potential customers are telling you they want in a product. Listen to what they are not getting from the existing products. Listen to what investors are looking for in the companies they put money into. Your business plan should read more like a record of all the valuable information you have heard, presented in a meaningful way that makes the case for your company’s potential success.

Put Down Your Pen and Pick Up the Phone

You’re much better served to do your business planning by picking up the phone and asking customers to buy than you are.

By: Wil Schroter

What's your story?

One of the first questions people tend to ask when they meet you is, "What's your story?" Over the years, I've been asked this question in several instances. For example, explaining the background of my company, "What's the story behind your idea / startup?" It's very popular in interviews and replaces questions like, "Tell me about yourself." It's common in social settings and often replaces the question after someone introduces themselves and asks, "So, what do you do?" It's sometimes used as a diplomatic way of prying behind someone's current status by asking, "What's the story with that?"

There is always a story behind who we are, what we do, and why we are doing it.

What's my story?

- Born and raised in Toronto, Canada.

- Chose to study economics (b/c it was the most practical degree) at the University of Toronto (b/c I could work in the city to help finance my education).

- Pursued a career in investment banking as it was one of the most challenging fields out of undergrad.

- Worked for 2 years as an analyst in the US and UK.

- Recruited for the firm, and in doing so, realized that many students, and in fact, people in general, struggle to find a practical source of advice (i.e. get access to specific types of people outside of their network).

- Decided to tackle this problem full-time and co-founded nkdGuru and ProspectLinker, which both have recently evolved into Viewpointr -- a service that helps you get insight from people outside of your network.

What's the story behind Viewpointr?

- born out of 1 passion: to help people get insight from those who are outside of their personal network.

The move to Viewpointr was shaped by the following events:

- attempted initially to create a marketplace for students to connect with Gurus (hence, nkdGuru) for a price -- didn't work due to an imbalanced incentive.

- changed to focus on recruiting and connecting employees with candidates (hence, ProspectLinker) -- however, getting committed participation from employees ended up being a major hurdle.

- decided to open up the site to users on an invitation basis

- observed user behavior on ProspectLinker and noticed users gravitated towards question and answer type activity.

- reacted to user needs by implementing one feature that allowed users to invite friends to help answer questions. As a result, activity increased.

- decided to make our next iteration completely focused on that 1 feature. Hence, Viewpointr was born.

Check out the full story here.

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The bottom line is I believe people love hearing stories! It makes you much more interesting. Make sure you have one and communicate it succinctly.

So, what's your story? I would love to hear it. Feel free to share it in the comments below.

Cheers,

Andre
http://andrecharoo.com

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Blog || http://andrecharoo.com