Start Smart
Positioning Your Software Venture for Success
http://sixteenventures.com

Agenda
• Pre-Game Prep
• Idea Due Diligence
• Technical Resource Engagement
• Raising Capital
• Missing Pieces

Ideas = $0.10/dozen
• ideas don’t matter; execution does
• people won’t steal your ideas
• you need feedback from others

Pre-Game Prep
mental
• Focus
• Failure IS an Option
• Fear
• Motivation

Pre-Game Prep
organizational
• Equity
• Software Ventures 101
• Does the Founder need to be a Programmer?

Pre-Game Prep
business
• Revenue Model
• Technology Has ZERO Value

Focus
• One Venture at a Time
• Don’t be greedy
• Don’t “hedge your bets”
• but <<famous entrepreneur>> has six ventures
going at one time
• he’s famous for a reason; you aren’t. Don’t worry
about what he is doing. Besides, he has people.
Mental Prep

Failure IS an Option
• Nobody wants to fail but you must know it is
possible
• don’t let the fear of failure keep you from trying
• If you do fail, fail fast
• do the “hard work” early to avoid failure later
• do not hold onto an idea that won’t work
Mental Prep

Fear is Okay
• without fear, you lose focus
• lack of fear breeds sloppiness
• fear is a very personal word, and at this point in your
venture, it is personal
Mental Prep

Motivation
• Desperation is the wrong reason to start a
business, especially a product-based business
• Looking for an “out”
• Consider Service-oriented business rather than a
product-based company
Mental Prep

Equity
• Understanding It; it is much more complex
than you think
• Two-Sides to the story
• Until you are ready to engage proper legal
counsel, you are not ready to discuss equity
Org Prep

Equity
your perspective
• Equity is NOT currency
• you are too early to be dealing in equity positions
• hold onto as much as possible for as long as
possible (this is not greed)
• entrepreneurs often feel like those they bring in
“need some skin in the game” as if that will get
more out of them
• pay cash whenever possible; it will save you money
in the long-run
Org Prep

Equity
their perspective
• you are asking them to invest in your venture
• equity only pays on exit or buy-back
• without control as well as equity, they are at the
mercy of your performance or whims
• cash is king
Org Prep

Software Ventures 101
• ISV defined
• On Premises vs. On Demand
• If its on the web, its a software venture,
right?
• Growth vs. Lifestyle
Org Prep

Founding Programmer?
• Not required
• Should be technical (or willing to learn)
• should not learn to program
• focus on the business
• you wouldn’t learn to weld just because
you wanted to open a body shop
Org Prep

Early Team Members
• Be Cautious
• Attorney
• Advisor(y board)
• Board of Directors?
Org Prep

Revenue Model
• what is a revenue model?
• 7 different ways to make money
• do startup software ventures need to have a
revenue model?
• You can’t know what revenue model(s) to choose
at this stage in the game, but you MUST be
thinking about it
Biz Prep

Technology = 0 Value
• the fact that you use Ruby on Rails or Java
to build your app means nothing
• Postgres vs. MySQL? Who cares
• Ajax UI? Android client? Nothing!
• Solved a problem? Aha! Now we’re onto
something
Biz Prep

Idea Due Diligence
• Goal: determine if the idea is a good idea,
or a good business
• Ideal Idea
• Validation
• Detailing your Vision
• Presenting your Vision

Ideal Idea
• It Solves a Real Problem in a Low-tech, fragmented
vertical market, with few relevant competitors and
a proven business model
• Deviating from this rule increases chance of failure
• Adhering to the rule does not guarantee success
• Whole Product Solution, not just a Feature
• No “Me Too” products just to be “in the market”

Market Validation
• is there a market for the product/service?
• Primary vs. Secondary Market Research
• Target Market Identification
• Competitive Research
• Sustainable Competitive Advantage
• Talking to Potential Users
• You Must Be Present to Win

Detailing Your Vision
• Extract it from your brain
• put it into a format that other people can make
sense of
• screen mockups, process flows, etc.
• You are not a Product Manager... forget UML, Req.
Docs, etc... just draw pictures!
• use this to get feedback, engage technical
resources, and/or raise capital

Presenting Your Vision
• Show trusted advisors, colleagues, friends,
and family your vision drawing
• make sure that they “get it” immediately
from your drawings... if they don’t, refine
• determine minimum features required for
version 1.0

Technical Resource Engagement
• Partner, Employee, Consultant or Software
Development Firm
• Protect your Intellectual Property (IP)
• Build vs. Buy
• Be True to your Vision
• Hosting / Platforms and Architecture

Raising Capital
• Go-to-Market vs. Raise Money
• Money Talks
• Choosing Investors
• Formal Business Plan
• Exit Strategy

Missing Pieces
• Patents
• Go-to-Market Strategy vs. Marketing Plan
• Corporate Structure
• Operations, Management, Staffing, etc.

Until Someone Pays You, Its Just an Idea
http://sixteenventures.com