SacStarts - Sacramento's Network for Startups and Entrepreneurs

Advice for the new entrepreneur

Adam Kalsey — Sat, 13 Feb 2010 17:08:32 +0000

Matt Mireles from SpeakerText writes a bullet-point list chock full of advice for the first-time entrepreneur.

No one is interested in the company you’re going to start in the future. Starting is a declarative act. Just go for it.

I talk to a great many erstwhile entrepreneurs that tell me all about their ideas and all the things that they’re going to do when they start their company. Or people who have started but aren’t really getting anything done because they can’t find the right co-founder or they need to design every last detail first, or they don’t have the marketing copy for their web site quite right yet.

Entrepreneurs do. We take an idea and a market and drive to make it happen. Figure out what’s standing in the way of you getting stuff done and just go through it. Once you’re actually building your company, a lot of those things that looked insurmountable turn out to be no problem at all.

Lots of business-y, idea-type people who say they’re looking for a co-founder are, in reality, looking for what is best described as an “engineering bitch.” Here’s how the pitch sounds from the engineer’s perspective: ‘For ten whole percent of equity, you will slave away to build a prototype out of my shitty idea, not have any say in the decision-making process…and oh yeah, you could be fired at any point.’

I don’t think a lot of business people get this point. Engineers aren’t just sitting around awaiting input so they can build something. They aren’t machines into which you feed an idea and a finished product pops out the other end. They have ideas, too. So why would they want to build yours for no compensation when they could spend their time building their own?

Want to have a good technical co-founder? Make your idea theirs.

Over the last 15 months, I have pitched nearly every sentient being I have met. This includes a guy I met at 4am after doing CPR on his mom (I’m a paramedic). The dude turned out to be a senior partner at a major international corporate law firm, and 6 weeks later he offered to take me on as a pro bono client.

As a startup, obscurity is your biggest problem. Constantly pitching your ideas helps solve that. How’s the great tech co-founder, the lawyer, the perfect first customer ever going to find you if they don’t know about you?

Pitching constantly also means you’ll get a constant stream of advice. Most people you talk about your company with will offer up thoughts about it. Free consumer research? Free marketing advice? Yes, please.

Every lawyer will give you an hour of their time for free. Remember that. Need 10 hours of legal counsel? Talk to 10 lawyers. … when you need to actually hire a lawyer, you’ll know what a good one sounds like––and have a fat rolodex of people you’ve already talked with to draw from.

The world is full of free and cheap advice. There’s all sorts of resources out there like this. For $100 I spent an hour with a CPA over coffee and picked her brain on how to set up the books and ensure I was filing taxes properly. I sent my exec summary to a half dozen angel investors and asked them for a critique. A couple of patent attorneys bought me lunch and spent two hours explaining to me exactly what’s involved in getting a patent and why I probably don’t want one.

Get a co-founder

Adam Kalsey — Sat, 30 Jan 2010 20:27:47 +0000

Got an idea for a technology product but don’t have the technical chops to build it yourself? You’ll need to find yourself a cofounder. You’re building a technology company, but have no technology people on the founding team. This leaves you with three options. Hire, outsource, or find a technical co-founder.

It’s nearly impossible for a technology company to succeed by outsourcing their early product. Don’t even think of going that route. Freelancers or outside firms can’t possibly deliver what you want because they don’t actually care about the product or the outcome.

To hire someone full time, you’ll need to pay them a reasonable wage. For someone that’s capable of taking the business ideas you have and translating them to a real working product that won’t fall over as soon as people start using it, you’re looking at at least $80k/year in Sacramento. Don’t think you’ll go get funding and then hire someone. You’re going to need a product before you can get any funding. Gather together whatever funding you have now and hire a developer. It’s going to be important to hire the right person the first time, so if you don’t have anyone who has hired technical people for small teams before, get help screening candidates.

Your third option is to gain a technical co-founder who’s willing to build this for a cut of the company. Expect to give them 25-30% of the company, but make sure you have a vesting arrangement so some crook doesn’t sign on, take 30% and quit the next day. Again, get some help screening them from someone who can tell if they know what they’re talking about.

Here’s the thing… You can’t just go out and “find a co-founder” any more than you can go out and “find a wife.” Your co-founder relationship is just that, a relationship. You’ll have a significant relationship with this person, and they with you. Likewise, they’ll have a serious relationship with the business. You need someone to fall in love with you and your idea and to love it enough they’re willing to take tremendous risks in order to be involved. People grow into relationships, they aren’t recruited into them.

So how do you find your co-founder? Same way you found your wife. You meet lots of people. Put yourself out there. Make sure people know you’re available. Date.

Talk about your ideas with everyone you meet. Most people won’t want to hear about it. But some will have feedback. This feedback will shape your ideas and change your business. Along the way, you’ll meet someone with a technical mind that gets just as excited about your idea as you do. You’ll find that the two of you can’t seem to spend enough time talking about the idea and the business. You’ll know that this person is the one.

Investing in ideas

Adam Kalsey — Fri, 01 Jan 2010 20:14:05 +0000

I often hear would-be entrepreneurs who have an idea for a product or a company and are looking for investors. My advice is always the same. Build something before you start looking for money.

Ideas are cheap. Everyone has them, and most have more than one. The ability to make something work is a whole different matter.

An investor’s job is to balance risk and reward. The risk to an investor is that they’ll put in money and not see any reward down the line. The reward is some return on their investment. Institutional investors want a profit. Angel investors generally want a profit as well, but may also find their reward in non-monetary ways; the satisfaction from helping young entrepreneurs, for instance.

An investor mitigates risk by investing in things that have a great chance to succeed. All other things being equal, the farther along a company is, the greater their chance of being a success.

If you have a prototype to play with, you at least know that the entrepreneur is capable of building his idea.

If you have actual users using the prototype, you know the entrepreneur is capable of building something others want.

And if you have any paying users, even if they aren’t paying much, you you know the entrepreneur has been able to build something that people want bad enough to pay for.

Each of these steps is a reduction is risk.

The more risk an investor has, the less likely they are to invest. And if they do invest, the more expensive their money is going to be. Anyone willing to invest in just an idea is going to want a lot more of your company for their investment, because they’re absorbing a lot more risk than the entrepreneur.

Note that this isn’t a universal truth. The less sophisticated an investor is, the less this holds true. Your mom probably loves your idea and is easier to convince to invest than a VC at a top-tier firm. Friends and family money is usually invested on the basis of your personal relationship with the investor. They know you, they believe in you, they’ll invest with a lot less assurances than an outsider.

Before asking investors to commit to you, have something you can show them. Show that you’re willing and able to accept some risk. Show that you’re capable of executing on your idea. Show that they’re not committing their money to a dreamer, but committing it to a doer.

December Dinner at Hoppy Brewing

Adam Kalsey — Mon, 30 Nov 2009 23:15:27 +0000

Dec 17 2009 - 7:00pm - 10:00pm

SacStarts entrepreneur meetups are informal get-togethers where the best and brightest technologists and entrepreneurs connect. Grab a seat and some food and meet other locals involved in Sacramento’s technology community.

There’s no agenda, no talks, just the chance to meet up with other local entrepreneurs for some great conversations.

There’s no cost to attend, just pay for your own dinner and drinks.

Location

Hoppy Brewing Company

6300 Folsom Blvd.

Sacramento, CA, 95819

United States

38° 33' 18.3312" N, 121° 25' 47.0208" W

November Dinner at Jack's Urban Eats

Adam Kalsey — Mon, 26 Oct 2009 19:39:40 +0000

Nov 1 2009 - 7:00pm - 10:00pm

Join us Sunday night for dinner at Jack’s Urban Eats in Gold River.

SacStarts dinners are informal get-togethers where the best and brightest technologists and entrepreneurs connect. Grab a seat and some food and meet other locals involved in Sacramento’s technology community.

There’s no agenda, no talks, just the chance to meet up with other local entrepreneurs for some great conversations.

Cost: Just pay for your own dinner and drinks, about $10-$15.

Location

Jack's Urban Eats

2137 Golden Centre Lane

Gold River, CA, 95670

United States

38° 37' 32.9916" N, 121° 15' 46.2636" W

Hiring Hacks

Adam Kalsey — Fri, 16 Oct 2009 21:37:41 +0000

Dan Arkind has some great advice for hiring in early stage companies over at FBfund.

Ask for advice, not referrals. It’s best if you call people you know and describe a problem you are having and ask for help (which will prompt them to refer you to awesome people who solve problems) than to call them and ask if they know anyone looking for a job (which will prompt them to refer you people who are unemployed).

OpenCoffee at Tupelo

Adam Kalsey — Mon, 29 Jun 2009 19:36:44 +0000

Coffee Garden is a little warm in the Summer, so we’ve moved Open Coffee to Tupelo Coffee on Elvas in East Sacramento. There’s plenty of free parking, the coffee is fantastic, and there’s no shortage of power outlets.

Come join us from 9am to noon at Tupelo coffee, 5700 Elvas, near 56th and H Streets in East Sacramento.

IMified acquired by Voxeo

Scott Hildebrand — Wed, 27 May 2009 10:00:01 +0000

Sacramento startup IMified (profile), founded by SacStart’s founder Adam Kalsey, has been acquired for an undisclosed sum by Voxeo, a provider of platforms for building voice and telephony applications. Voxeo is a privately-held company headquartered in Orlando, Florida. Adam and the other founders of IMified have joined Voxeo’s R&D group as part of the sale.

IMified offers a simple, web-based platform that enables companies and developers to write an instant messaging (IM) application once and connect it to all the public IM networks, including AIM (AOL), GTalk (Google), MSN (Microsoft) and Yahoo. Building, managing, and scaling an interactive IM application or “bot” has traditionally been a complex and frustrating task. IMified’s solution removes the complexity and provides a simple solution for building and deploying IM applications on multiple public IM networks using one simple API.

Voxeo’s products are often used as part of unified communications and self-service application suites. IMified’s technology will extend their capabilities in this area. Jonathan Taylor, Voxeo’s President and CEO said, “instant Messaging is an important piece of any company’s unified communication strategy. IMified significantly expands Voxeo’s unified communications offerings with the worlds largest IM application platform and most experienced development team.”

The existing IMified services won’t immediately change, and the service is still taking signups for new developers. Voxeo has not revealed any future integration plans.

Adam is remaining in Sacramento and will continue to be involved in SacStarts.

Entrepreneur Breakfast

Adam Kalsey — Fri, 15 May 2009 04:59:48 +0000

Jun 11 2009 - 7:30am - 9:30am

Join SARTA’s VentureStart, The Sacramento Entrepreneurship Academy, and other local entrepreneur organizations for a breakfast at Sacramento State’s Alumni Center.

Network with the regions’ funding sources, entrepreneurs and business mentors.
Learn about the programs in support of your next million $$$$.
Discover the brightest and best entrepreneurial minds in our region.
Engage your next potential investment.

Tickets are $10 and must be purchased in advance.

Location

Sacramento State Alumni Center

6000 J Street

Sacramento, CA, 95819

United States

38° 34' 0.5376" N, 121° 25' 40.1628" W

DFJ Frontier raises $55 million fund

Adam Kalsey — Mon, 27 Apr 2009 17:57:01 +0000

DFJ Frontier, a venture capital firm with offices in Sacramento and Santa Barbara, have announced their second venture fund, a $55 million pool that counts CalPERS and Credit Suisse among its investors.

As with their first fund, DFJ Frontier intends to focus their investments on west coast companies in media, information technology, life sciences, and other industries. The firm has made several investments form this new fund, including companies in southern California and Seattle, Washington.

Along with the new fund, DFJ Frontier named Frank Foster as a managing director and opened a new headquarters office in Los Angeles and a fourth office in Portland, OR.

Local angel investor Jim Schraith has joined the firm as a venture partner.

DFJ Frontier typically invests in early stage companies, providing seed or first round investments in west coast technology companies. The company often acts as the lead investor and takes an active role in the management of their portfolio companies.