If you haven’t spent time on Ben Kuo’s website, www.socaltech.com, or his blog… you should. He recently posted a link to a great study on the exit markets from mid 90s to today. What types of exits are happening? How have different era investments fared, etc. Check it out.

Attached is a very helpful, well written article on the “new rules” for building a successful SaaS model. The article was written by Kyle Murphy, the EVP / CFO of VantageILM, an early stage SaaS company located in Pasadena that serves the finance industry. I would strongly encourage this read if you are building this type of business.

Software Gets A Service Call

There’s no shortage of advice for start-up companies to follow, but in my experience working with emerging technology companies I’ve noticed something that’s just as important: there are certain pitfalls that bog down entrepreneurs, costing them money, time and ultimately a chance to break through the clutter. Every new venture has limited resources – and limited time – to get off the ground, and anything that needlessly burns cash or slows progress limits the chances of making it to the next level. Here are five ways to avoid the most common traps that snare new companies.
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Later stage companies grow in a fairly predictable manner and their future focus areas and activities are also predictable. For instance, the management team at John Deere can probably look out at least a year and make very accurate projections about their likely growth, product mix, key management challenges and deliverables, etc. In contrast, a year in the life of a start-up will be filled with unexpected changes in people, plans, focus areas, etc. Given that start-ups usually have limited cash, it is extremely important to understand what matters in the big picture and, therefore, how to make decisions as time unfolds so that the company is constantly tracking towards a good outcome. When we begin working with a start-up company, we always deploy two tools early on: a DashBoard and a ScoreCard. Continue Reading »

Founder / entrepreneurs are among the most intriguing people you will ever meet. In order to overcome the almost impossible odds of starting a business they have to possess certain traits: extreme confidence in their vision, creativity, endurance, enthusiasm, etc. Given the entrepreneur will hear “it will never work” so many times at the beginning they have to be stubborn and unyielding in the face of criticism. All of these traits are typically found in founders who successfully push their companies from an idea to a working product or to a first set of customers. Unfortunately, these same traits are often what causes a founder to fail as a leader in the next chapters of a company’s growth. This note is about what entrepreneurs should be focused on as they consider taking their companies to the next level (more staff, outside investment, etc). Continue Reading »

“I don’t know what my business will look like three months from now let alone three years!”

Every entrepreneur hates the dreaded financial model. Just the thought creating one can cause heartburn, fatigue and endless discussion about the unnecessary burden put on entrepreneurs in order to raise money. Less-experienced entrepreneurs often will try to dodge financial modeling with claims that “our market is so big, you don’t need a model to convince yourself we have a great business” or “I’m too busy running a business to spend any time building spreadsheets”. But the reality is that if you’re going to raise money, you’ll need to build a detailed three to five year financial model. The surprising news is that the exercise of building a model will help you better understand your business and make you a better entrepreneur. Continue Reading »

I remember a particular discussion in a business school class when the professor asked if success is driven more by what you know versus who you know.  I recall coming down strongly on the side of what you know.  Given the significant investments I had made in engineering studies, graduate school and analyst training programs, I suspect my point of view at that time was predominantly driven the magnitude of these investments combined with a predominantly theoretical view of the business world.  Now I’d like to fast forward 15 years later and re-evaluate my assessment. Continue Reading »

This post is in response to requests to share a presentation I sometimes give on why business plans aren’t great tools for early stage companies. The link below is to a .pdf version of the presentation that shares views on why Business Plans don’t work well for investors or for managing a company. There is also an outline of how best to approach investors, with what materials. I hope it is helpful. Download the PDF

Why You Shouldn’t Write a Business Plan

PowerPoint is a great tool. However, in an investor presentation it can hurt you more than it helps you. Investors watch pitches for a living, and over time, watching presentations gets boring and can even be annoying. If you’ve made many pitches to professional investors you know that, on average, you’ll get about 5 minutes or maybe 2 or 3 slides into your presentation before you will start getting interrupted. This phenomenon inevitably leads to a meeting where the entrepreneur tries to get the meeting “back on track” (to his well rehearsed PowerPoint) and the investor gets increasingly annoyed that his questions aren’t thoroughly addressed. Through trial and error, I believe I’ve come upon some good rules to follow and a good format to balance everyone’s needs and agenda. Continue Reading »

When Facebook launched its open API program in late May, it changed social networking forever. While the idea of an open API isn’t a new, the reality of being able to build a social network on top of an existing one especially one the size of Facebook, is close to revolutionary. If you’re a consumer-facing website targeting a younger demographic, you need must to look at the Facebook platform today. You can be pretty sure that your competitors probably already are. Continue Reading »