startups – Page 2 – Winning Stack

August 22, 2011August 22, 2011

How to Finance your First Business

We read articles on Techcrunch everyday of new companies getting huge investments for their next breakthrough product. We dream that one day our own ideas can attract that much excitement (and investment). So what are your funding options for starting an online business?

1. Borrow from people you know.

Ah yes, borrow from the three Fs – friends, family and fools! I have done this a couple of times, with three different projects. I had friends who had money, but no ideas. I had tons of ideas but no money. It was a match made in heaven!

Make sure you have a backup plan if things don’t go according to plan (which they rarely do). Your relationships should come first – so find a way to pay them back, if things don’t work out.

2. Borrow from people you don’t know.

This would of course be third party investment from angel investors or venture capitalists. There would have to be some particular reason for them to invest in you though. You may have the greatest idea in the world, but investors prefer to see the ability to execute first. You could show them this ability to execute by doing any of the following:

Have previous experience in startups. Of course this becomes a chicken and egg situation – how do you have experience if they won’t give you the funding first? Maybe try option 1 or 3 for your first few projects then, before coming to option 2.
Have a great education from a name brand university. One benefit of graduating from a good university is the connections that come along with it. If you’re fortunate enough to have these connections, make use of them!
Win a contest! Join a startup weekend – go through the process and see what happens. You’ll be able to make great connections, and even form a team of talented people willing to help you. Heck, if you’re good enough and lucky enough, you may even win.

3. Bootstrap:

Bootstrapping refers to starting a business on your own, without any external help. Just tap into that huge trust fund you have, and you’ll be all set!

What, you don’t have a trust fund?! In that case, you’re in even better shape! One of the benefits of bootstrapping is that you learn quickly to make your business profitable, since it’s the only way it’ll survive otherwise.

Figure out the cheapest, viable way to get your business started. Reinvest any profits back into the business to keep improving it. Raise prices as you raise the quality of your product. Lather, rinse and repeat.

I’ve done this over and over with projects that look big and complicated today, but which started off as tiny projects, with incremental improvements over time.

Bootstrapping lets you prove your business worth to yourself and others. Start with $100 and see if you can turn that into $200. Then move up to $1000 and see if you can turn that into $2000. Then work your way up to $10 000, $100 000 and later a million dollars!

Bootstrapping will take you through the school of hard knocks. The pressure is all on you to perform. The buck stops with you. Can you motivate yourself to succeed? If you can’t, then how do you expect to lead a larger team later on?

If you fail, then figure out your mistakes and start again on a new project, until you can succeed. No sense in moving to the next grade, if you can’t pass your current one.

Work your Way Up

In my short business career, I started with bootstrapping my first site, then later my own apps. This experience gave me the courage to get friends to invest in me on bigger projects. From there, I moved on to Startup Weekend, which the team I led recently won. We are now working on a project that would be my biggest to date.

Every journey begins with the first step. So don’t fret if the end seems so far away. Work your way up. Enjoy the process. Enjoy the scenery. Make lots of friends. You may need to borrow money from them later.

August 16, 2011August 22, 2011

10 Lessons Learned at Startup Weekend

This past weekend, I attended Startup Weekend Taipei. If you’re not familiar with what a startup weekend is, it is a weekend event that attracts developers, designers, marketers and anyone with an idea. They get together to form a team, develop an idea over two days, then pitch it in front of judges for a prize on the final evening.

Friday:

The event was sold out and had attracted around 120 attendees. Each attendee wore a name tag with a dot to identify their skill set. Mine was red, signifying “Business / Marketing”. The joke going around was that these were the people with no specific skills.

I had come in with several ideas of my own, and was toying with which one was the best for this event. To date, all my projects have been developed on my own, through outsourcing. This was the first time that I would be able to form my own team and manage everyone from the same room. I was looking forward to the process, experience, and the contacts I hoped to make along the way. For most people, the networking is their biggest gain from this event, and I too expected to gain from that.

The pitch I ended up doing was an app (web and mobile) to help users search for food items they were craving, and find restaurants nearby that served them. There was a long line-up of about 30 people waiting to present, and I was in the middle of the pack. I didn’t want my pitch to get lost in the shuffle, and wanted a way to stand out so people would remember it.

I noticed that most pitches were done in Chinese, since the event was held in Taiwan. I thought about doing my pitch in Chinese as well, but then decided to do it in English. I figured that I wanted the members of my team to be able to speak English, so doing the pitch in English would eliminate non English speakers from joining. It would also make my pitch stand out among English only speakers.

Lesson 1: You don’t always need to target the biggest market. It can sometimes be better to be a big fish in a small pond, than a small fish in a big pond.

Rather than just describing the problem that I hoped to solve with my product, I told a story of how my pregnant wife always had cravings for particular foods (true story!). For example, she might suddenly want a Kung Pao chicken (宮保雞丁) and would send me out on my scooter to find this food. I talked about how frustrating it was to not know which restaurants served those particular foods, without being able to see their menu first.

After the pitches were completed, attendees got to vote on which ideas they wanted to see continue. The top 15 ideas were then selected. Many people came up to me and recognized my pitch among the rest. “You’re the one with the pregnant wife”.

Lesson 2: Use stories where possible. People remember stories.

As our team was forming, I realized that we needed the right match of skills. We had three coders, a mobile and a marketing person. I was informed that we needed a designer. I sent one of the members out to recruit a designer. He did well, and returned with one shortly. Our team was complete.

Lesson 3: Form a team with skills that complement each other well. Your idea is only as good as the team that surrounds it.

Our mission that evening was to come up with a team name. This was tough for us, because our target market was local Taiwanese, so traditional English names wouldn’t necessarily work with them. We ran through several combinations.

Foodjing Logo

We found some that we really liked, that were promptly rejected by the local Taiwanese members of our team as not being “local friendly”. Eventually we settled on Food Jing, a play on the word 附近 in Chinese which means “nearby”.

Lesson 4: Choose a name that resonates with the market being served.

Saturday:

The coding team, led by Dobes and Greg spent all day developing the front and back-end of the product, working in tandem with our talented designer, Quaint. Will worked on the mobile aspect. In the mean time, Hao who had previously claimed to have “no relevant experience” was one of the hardest workers on the team – developing a comprehensive customer survey, and then interviewing a lot of people to get feedback on the problem we were trying to solve. Later, he would visit twenty restaurants (the Taipei rains didn’t help his cause) to get feedback from owners there as well.

Lesson 5: There are no small roles. Every member of your team can contribute somehow.

During the day, several mentors who had been assigned to assist teams, came to visit us to monitor progress. They asked questions about our business model and there were several that I couldn’t answer. After each visit, I found myself redoing parts of the plan to address the raised issue. It seemed that just when we thought we had thought of everything, someone new would point out something we had overlooked.

Lesson 6: You can’t see the forest for the trees. When you are truly invested in a project, it is easy to get too focused on the details. Outside opinions can be extremely valuable at these times. If they don’t get it, there’s probably a problem to be fixed.

By the end of the day, we had made good progress, but there was still something missing. Our Facebook fan page hadn’t gotten the traction we had hoped it would get. (We would later find out that we had accidentally restricted it to fans in Taiwan only, which blocked a lot of fans from getting through – oops!). So we needed something to get us back some momentum.

As part of the marketing team, I noticed that the word foodjing could be used in many creative ways. So I found a freelancer online to create a parody video of “Killing Me Softly” by the Fugees. We would later release it as being by the Food Jies. Fans loved it, and it helped market our brand as being a little zany and over the top.

Lesson 7: Problems and challenges will arise in any venture. It’s how you overcome and rise from them that determines your future success.

Sunday:

The final day was spent completing the demo and working on our presentation. I decided to build on the momentum we had from the previous day, by ordering tshirts with our logo, for our team to wear on stage. This proved extremely difficult to get done in a single day (on a Sunday no less). Once again, Hao came to the rescue, running across town from vendor to vendor until he found one who could print just one for us. We took it!

During the practice presentations, I had worked to overcome all the questions that the mentors had given me the previous day. I invited more to grill me further. Mark Koester recalled a stunt that his startup team performed during their final presentation. They had ordered a hot dog during the demo, that was later delivered on stage. We decided to do the same thing in ours by ordering a taco during our demo.

Lesson 8: Find ways to make your presentations different from the rest of the pack, so it will be noticed by the judges and audience.

One of the visitors who gave us advice, would later turn out to be one of our judges. He asked me about where our revenue would come from. I told him that while Taiwan had a lot of smaller, mom and pop restaurants, we planned to focus on the larger restaurants that could afford to use our services. He frowned and commented that if it was him, he would be focusing on those smaller restaurants, rather than the bigger ones, since that’s where the real opportunity was.

I thought about his comment a lot and realized it made sense. I refocused our presentation to emhasize the smaller restaurants and the long tail of food. This also further differentiated our product from competing ones on the market.

Lesson 9: The mentors are provided for a reason. Listen to their advice and follow it!

It was presentation time. Pandey started us off with massive enthusiasm. During the demo, he showed how a taco could be ordered. During my half of the presentation, the taco was delivered on stage to a thunderous ovation. I wore our branded tshirt underneath, and revealed it during the presentation, which also drew applause. Finally it was down to the judge’s questions. Practice makes perfect. No surprise questions there, so no problem with the answers. The crowd seemed to like the extra touches we had prepared.

Lesson 10: Have fun with it. People like to deal with happy people.

Judging from the responses, I suspected we had a chance at a top three finish.

As the second and third place winners were first revealed, I wondered if coming in first place was possible. Out of the corner of my eye, I thought I noticed Sascha Pallenberg aim his camera phone at me, as if expecting to see us win. Sure enough, we were announced as the winners and pandemonium ensued on our team. All the work we had put in had paid off, and we had come away as winners!

Later, I had a chance to mingle with the judges to ask what specifically they had liked about our team. The feedback given included having a clear message of the product we were trying to sell, as well as execution of this idea. Business cards were exchanged. New relationships were formed.

The Future:

Now that startup weekend has ended, a new chapter begins. There has been great support on our fan page, which has inspired us to continue this process. Meetings have been arranged this week and next, and the business plan has been honed down further. I realize that there is a long road ahead of us, but it’s one that I’m looking forward to traveling. I hope to document more details on this blog as they happen.

July 25, 2011July 26, 2011

How to Write the Perfect Business Plan (Hint – don’t!)

This post is going to seem a bit contrary to the advice most people give you. Whenever you start a new venture, you are advised to write a detailed business plan to get you where you want to go, and keep you on track. The trouble is (especially in the online world) most businesses don’t go according to plan. New technologies are coming out all the time that render previous ways of doing business obsolete. In order to succeed, you’ll need to remain flexible and be open to changing paths where necessary.

Instead, I recommend setting a clear vision of your company and where you would like to be six months from now, a year from now, two years from now etc. However keep the paths that get you closer to your vision open. Be on the lookout for new ideas that can get you to where you want to go faster.

When I first had the idea to teach Chinese online, I had no idea what a podcast was, leave alone that it would form the hub of my business model. Later, mobile apps became a big part of my business strategy. In both cases, I was able to get on board fairly early, which played a big part in my success. Had I been a few years late to get on board, the results might have told a very different story.

Keep tabs on your biggest customers (especially early on). Find out what they like about your business, and what they think can be improved. Strive to keep them happy. Set up a Google alert on your company name, to find out what others are saying about you or your company. Many times, such alerts have led me into forums that were talking about me that provided extremely valuable insight. Such feedback was then used to tweak the system, keep improving and take me closer to the goals I had set for the business.

If you have written a business plan already, make sure it’s a living, breathing document that can be altered and changed where necessary.

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July 25, 2011

How to Compete – Small is the New Big

We are living in an unprecedented time in the history of innovations. What used to take companies decades to achieve is now being done in a few years. Companies like Google and Facebook have come from nowhere to become multi-billion dollar behemoths in no time. Five years from now there will be other massively huge companies out there, that you haven’t even heard of today.

Maybe you have the next billion dollar idea in you, but you don’t know it. Or maybe you do know it, but are scared away by competitors with billions of dollars in their pockets. How are you supposed to compete with them? The trick is to think big, but act small!

What kinds of advantages does being small give you? Take a look at the website of your favorite tech company. How easy is it to contact them? Send them an email and see how long it takes to get a reply. As we speak, I am currently trying to negotiate a refund from a company for a product I canceled two months ago. Very poor service indeed. Most users of my products who email me are surprised at the speed at which I reply to them, as well as how fast I can process their requests. That’s the advantage of acting small!

Any time Facebook makes changes to their site, there are massive protests from their user base. Several times they have had to remove changes they have made in order to placate their users. This is what happens when you’re big. It becomes much harder to adapt and change to the marketplace. Look at companies like Nokia, RIM and Microsoft, that had to make huge changes to their smartphone business when Apple and Google came out with their new models. They weren’t able to make the changes in time, and as a result have lost huge market share to newcomers to the industry.

When I started my first site, I began scouring the forums of my biggest competitor to see what gripes their user base had with them. I then designed my site to address those issues and win over that base.

The next time you are trying to compete, see if you can take one of your competitor’s strengths and use it against them.

July 24, 2011August 7, 2011

Launch It

Ok, you have a great idea for a new website or product that you think will revolutionize the world. You have all kinds of ideas for new custom features that you think will set it apart from the competition. Perhaps you’ve already been working on this product for a while, but it doesn’t seem ready for release yet, or the costs to get it up to par seem daunting.

My advice to you – unless you’re already an established company with brand identity behind you, get the product out there as soon as you can, in its simplest, usable form. Don’t get me wrong – take the time first to make sure everything it promises it can do now works, but don’t worry about the custom redesign or advanced features yet. Get users out there using it now, and use their feedback to improve the product further.

I launched the first version of Chinese Learn Online like this. I used a default wordpress theme and recorded the first podcast in my basement and got it out there. A few weeks later, I got my first paid subscriber, who sent me a cheque in the mail. That slowly led to another subscriber, and another, until I had enough money to hire a graphic designer to redesign the site for $275. And that’s how it began.

Since then, I’ve used a lot of customer feedback and sales from the early subscribers to reinvest in the site and improve upon it substantially. As more services were offered, I raised the cost of subscriptions, but let early subscribers hang on to their original plans to reward them for their early support. There have been two advantages to this approach:

I was able to get started much quicker than if I had tried to raise the funds to build the site with all its features to begin with.
Much of the changes that were made to the site later on came from customer feedback from early users. This was feedback that I wouldn’t have been able to generate on my own. These early users were happy to see the changes they suggested being incorporated which made them evangelists and help promote the site further.

I later used this same approach to launch my STL Contacts Manager app on the app store. That app has gone through several updates and releases, mainly from customer feedback. The funds from early sales helped pay for future updates, and the app today is much more feature packed than anything I could ever have come up with (or afforded) had I tried to do so in the beginning.

Do you have any projects that you have been working on, that have taken forever to launch? Is there anything you can do to simplify it, in order to get a functional, early release out there?