- Founder and CEO of TrustedPeer
- 30 years professional experience in Internet infrastructure services, telecommunications, business applications, and healthcare applications
- CEO, COO, and CFO for seven technology companies resulting in five acquisitions
- Director of Finance and on IPO Team for Electronic Arts
- SEAL Team 2 - BUD/S Class 99
- All 8 Best Practices
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Company Founder - From Concept to Commercial Launch
- Founders often think that their "brilliant" idea alone is sufficient for success.
Remember the movie Night Shift? Michael Keaton's character comes up with the idea to "take a live tuna fish... and feed it mayonnaise."
Ideas are cheap but starting a business is expensive and time-consuming. Research shows that your brilliant idea will change several times before launch. It's not a brilliant idea until someone (not your mother) pays for it.
- Founders overprotect their idea since they believe that someone will steal it.
You don't yet have anything of value to steal. Tell as many people as possible about your idea to see if it resonates. And forget about having an investor sign an NDA at this point. You're just showing your naiveté.
- Founders fail to perform exhaustive market research and competitive analysis upfront.
What is exhaustive? Three straight months of eight-hour days of Internet searches, research and meetings with company executives. This includes documenting your findings in a way that can be referenced. This information will become the input to your competitive analysis. It is essential for you to have first-hand, in-depth knowledge of the market and the customer. Do not outsource this activity. Do it yourself.
- Founders tend to underestimate the time to commercial launch.
Don't even try to estimate it. You'll be wrong anyway. If you're concerned about when your'e going to get to the magical "cash flow break even" point you shouldn't start the company. If you're focused on making money, you're not committed. To arrive at a launch date with the right product or service takes as long as it takes. If you're not in it for the long haul, best keep your day job. Or get one soon.
- First time founders tend to get ahead of themselves in terms of organization and infrastructure.
You are not starting a company – you are developing a concept that may need a company to succeed. You do not need an organization until there is work you can't do yourself.
If you are not able to operate alone or think that you need others around you for motivation, again, better to keep that day job. Same goes for an office and an accounting system and a website, etc. You need only a quiet place (not Starbucks) with an Internet connection and no view.
- Entrepreneurs sometimes raise professional money too soon.
Having professional money is no guarantee of success. "If failure is defined as failing to see the projected return on investment – say, a specific revenue growth rate or date to break even on cash flow – then more than 95% of start-ups fail" (Source: Wall Street Journal, Sept. 20, 2012).
Professional money has strings attached since the money managers have superiors and limited partners who need to realize a return on their portfolio investments. Professional money sometimes means too many cooks in the kitchen trying to steer the business concept in too many different directions. Do not court professional investors until their money is a necessity for growth.
- Founders fail to understanding the difference between beta testing and commercial launch.
Beta testing is about ensuring that a product or service will be ready for customers; commercial launch is about driving customers to your product. Beta testing involves assessing functionality, usability and technical viability.
Commercial launch involves telling the story of your product and your brand, and marketing your offering to prospective customers. Just because you build it and beta test it does not mean that customers will flock to your product.
The stark difference between the testing phase and the launch phase is often blurred in the mind of the founder/CEO.
- Founders underestimate the intelligence of their audience.
If you think your audience is stupid because they "just didn't get it," then you need to re-examine your business idea or your communication skills and methods. If your business idea addresses a recognizable problem, then it should be easy to articulate; if it does not meet a need then it is not a business idea. It is your pipe dream.
- Founders often show a lack of commitment by setting a limit on how far they are willing to go before they give up.
If you tell yourself, "I'll give it six months, or until New Year's Day or until I spend X dollars of my own money," don't bother starting a business because you are not totally committed. Don't waste your own or anybody else's time or money.
Starting a business is a 24/7 commitment with no definite end date. In the earliest phases, the founder is the brand. If you yourself do not believe in it enough to continue against overwhelming odds, it is certain that no one else will.