I am 99.99% sure that you would go and build a prototype ( can be a paper sketch) before you actually go and build a real product.

Here is a good piece of article which covers some tools which can help you create nice little prototypes. Most of them are paid but comes with trial versions. So be quick to create your prototype. Even if it leaves a watermark in there you should be fine explaining your idea ( unless you know that your audience wont like it and you might loose a big deal)

Prototype Tool Roundup

If you are working on your strategy to reach upto maximum number of users and increase your customer base, you might want to read this recent study conducted by Business.com on Social Media.

It tries to give answers to some of the interesting questions like:

1. To what social media sites do business people turn when seeking the information they need to do their jobs on a day-to-day basis? And what are they looking for?
2. What do people consider to be the most useful social media resources for business information (and, therefore, the most valuable social media sites on which B2B companies should participate in order to reach their target audience)?
3. What are the most popular types of social media initiatives among B2B companies, and is the impact of these initiatives visible in business results?
4. How do B2B companies judge social media success?

Its free to download, but registration required.

I have always been a firm believer in making community around more stronger, because of very simple reason. When you make community strong, you as part of the community get stronger. Whether its about increasing computer literacy amongst the kid via CL4K or chairing alumni group trying to give best of world back to campus.

I am proud to introduce FounderWise a unique institute for founders in the Seattle/northwest USA to learn from the best of the breed CEOs and VCs who have gone through it and have taken the real challenge.

Below are details from mailer:

The Founder Institute ( http://www.founderinstitute.com) is a four month training program for both new and seasoned entrepreneurs. The Institute prepares founders to lead the next generation of world-class technology companies across a wide range industries, from the biotech to the internet. Weekly company-building sessions are guided by experienced CEOs, and they are held in the evening to allow participants to keep their day job or develop their companies during business hours. All of the program stakeholders, from the participating founders to the experienced CEO Mentors, share in the upside generated by the companies formed during the program. Participants also enjoy free services from more than three dozen Institute Partners, fundraising opportunities at fair market value, and a teamwork-oriented environment to build a company.

Sound good?  Potential Founders (students) interested in the Seattle winter semester of the Founder Institute can apply at http://www.founderinstitute.com/apply/5. Early Admissions Close on November 12, 2009, regular admissions are due by November 27, 2009.

Want to learn more about the Founder Institute program in the Seattle area?  Come to a special informational evening at the Boeing Auditorium on the University of Washington campus on the evening of November 2nd, 2009, hosted by the UW Center for Innovation and Entrepreneurship. Registration for the free event is available at http://founderwise.com/events/.

FounderWise (http://www.founderinstitute.com) was launched to operate the Institute in Seattle and to be a founder-centric resource for simplifying the process of founding a successful startup, focusing on training entrepreneurs and establishing an extensive library of original and compiled startup resources.

Technorati Tags: founderwise,startup,seattle

I was participating sometime recently in an startup forum and there was usual debate on how to best raise the venture capital or any angel investment and then discussion diverged into one should raise it only when they need it.

Fair enough. This has been said so many times before, but rarely someone has talked about the fact that  one should prepare himself/team as if they really need to raise money from market.

Even if you don’t need to raise capital from VC ( which is good for you) there are certain benefits of mocking the idea that you need to raise the money and answering questions a typical VC would seek from you .

1. It brings discipline in you and your team: I have seen teams running or trying to run their business in a pot-luck style with no plans around why they are investing where they are and how long they will last with their current expenditure velocity. If you do the VC exercise, you and your team would know some facts about your own business and your money. Will help you to run your startup in a more planned manner.
2. It prepares the team to face and get ready to answer hard questions: VCs are tough nuts and they have to be because they are investing money without actually getting involved into your day to day operations. They pose tough questions and make you think outside all your emotions you have towards the product you are making and/or team you have in place.
3. It helps you validate: Once you are done with this exercise, I am sure you will end up with clearer vision, clearer milestones, clearer go to market strategy, clearer competitive landscape. ..you would have all your ideas flushed out clean and would be sitting in front of you in written. You can go back to it and validate how you are doing against it.
4. It actually prepares you ahead of time: Now that you have actually gone through mocking that you need to raise capital from VC, you are well prepared ahead of time( you never know). This would help you for your actual 5-15 minute session with the VC where he/she can figure out if this company has potential to go to next level ( they can actually figure it out sometime in 60 seconds).

I would love to know if there are people or teams which actually do this mock exercise. Also it would be good to know any professionals who can actually spend sometime with these startups and do a VC role play, pose tough questions and potentially guide them through actual fund raising from a VC.

Follow me on twitter at http://www.twitter.com/ruchitgarg

Couple of days back i got to know about a Seattle meet up for entrepreneurs called Naked Truth from Fred’s blog post.

I could not get to attend this event as there was a huge waiting list (over 500 ) but then for some reason, Naked Truth decided me to be their ‘member of the week’. Below is the screenshot of the email I had received. Nothing attached with being member of the week, but its something unexpected.

You can read and see more about this event on Fred’s blog post.

No matter who you are and what you want to accomplish, your relationships are going to play important role in your life. This is particularly very very important for startups as they are trying to create ’something’ out of nothing. Resources would always be less and time would always fly.

What can help startups is, their relationship with people in the ecosystem.

Just as an example, One of the most talked about topic between wannapreneurs ( individuals who wants to be entrepreneurs) is how to reach a Venture Capitalist. Many a times this thought gets into head and mess everything up even before individual has actually thought through the product/company he/she wants to make. This is beautifully captured in this post How to approach VC

You can also Follow me on twitter.

I had a good discussion this morning with one of my friend who has just completed some course from IIM Bangalore and looking forward to start of her own. In this discussion she shared name of her planned venture with me, and looked for feedback.

Below is what I shared with her( and thought I should share it with you all)

1. KISS: Keep it simple and stupid. Your product name can be VeryGlorifiedWayOfMentioningSomethingVerySimple, but if its this complex, I am not going to remember about it.
2. Connect with Audience: Name should connect with users who are going to use your services and probably pay for it. e.g. I can keep name of my next webproject as httpWebRequestToFindBankAccountString, which might make sense to some technical folks around, but not for the people who might actually be using your product.
3. Follow your heart: At the end of the exercise if you are not confortable with what you get, whats the point? Go for a name which you think is the best. After all you should feel attached with this new name too.

Once you are done with name which satisfies both of the above requirements, you can design logo and add a punchline to it, to add to the whole story.

What do you think when you think about naming a product or a company?

Leaders often always go through adverse situations charting uncharted terrirotories before they get recognized as a ‘Leaders’. One who is on the leadership path is percieved very differently from rest of the mass depending on which phase of leadership he/she is in. And people react to leader’s deeds differently.

Lets categorize leadership phases based on how people would react when a leader ( YOU) takes an initiative:

1. Laugh: People would laugh on you. Quite possible, because you are doing something different than others. What you are doing makes no sense to others, otherwise they would have done it before you did. Maybe.
2. Silence: When you keep doing all the stuff which made people laugh , but then which generated results, it shuts the mouth of people who are laughing. Its a silence phase when mass stops laughing and quietly observe what you are doing. They try to understand what you do and how you to doit.
3. Follow: As a leader you continue do all the great stuff and people would start following you. There may be some bright talent around you who may get inspired by you and starts his own leadership phase, but most of them would follow you. They would try to mimic what you already did.
4. Worship: This is an ultimate stage and I guess not so easy to attain. Most of the leaders we know may fall under phase #3. This is stage where people start worshipping you almost if not same as God. People can do anything for these leaders.

So now you know that when you take a new thoughtful initiative and people are laughing on you, probably you are on a leadership path.

This I learnt many years ago while I was still doing my studies, from a person I admire  Kunwar Shekhar Vijendra.

NYtimes published this article heading ‘In Developing Countries, Web Grows Without Profit’ couple of days back on internet, where the likes of Youtube & Veoh services talked about huge investments they had made for certain geographical location ( because people use their service more in those location) and then cribbing about how ‘tiny’ or no profits they are making from those locations.

This article made some rounds/buzz in the circle as people around suddenly thought they now know a proven way of not investing in/for these geographical location, or even throttling out users.

I wonder why would you not want your users to use your service?? After all users are using your services in legitimate legal way! They did not hacked away your bandwidth, but using the content you wanted your users to watch.

Issue here is with the business model you have chosen and NOT with user base of a specific geographic location. There can be nothing better if you have a shop and you have customers lined outside., but my friends You can’t sell same thing to everyone in same way. You should know how to monetize your content.

As Ram Charan points out in one of his videos, you would need to think like a shopkeeper around the corner.

Another example I want to quote is of Twitter. Very famous, useful ( atleast for some) millions of users, revnues??? They may have some money making plans..but? On other hand look at another service SMS Gup Shup which is famous, useful ( atleast for some), around 20 million users, and revenue=$150,000 USD and expecting break even in couple of months. Importantly, GupShup is on the way to make profits by ’selling’ to people in the same geographies.

Barry R. Bainton is founder owner of B R Bainton Associates, a virtual consulting firm. He have been a business consultant and life coach for the past 25 years serving small business start-up, non-profits and  firms in transition.  Barry have a PhD in anthropology and MBA in international business.Below is a multi-part series about ‘what I am worth’ by Barry a common dilemma faced by many.Also checkout Part-2, Part-3, Part-4

I have been asked many times, by entrepreneurs and those considering starting their own business, — What should I pay myself?    How do I price my services?
It is a question I have had to ask myself, as a sole proprietor/consultant, from time to time as well. My experience with start-ups is that there is no formula for executive compensation, other than the survival of the company. If you are the sole proprietor, or owner of the company, you assume the full risks of the business. This entitles you to the full rewards of the business. If you are part of a group of business founders, then your ownership risks and rights (unless a partnership) are determined by your share of the corporate entity you formed. Partnerships are a special form of business relationship — like a marriage, where each partner is responsible for the debts of the others.

So how do you determine what you are worth when you decide to start a business, alone or with others?
The Simple Answer:

1. To yourself, you are worth what you want.
2. To the company, you are worth what it can afford.
3. To the market, you are worth what you are willing to settle for and the buyer of your services is willing to pay.

How do you value your contribution?
When you start a business alone or with others, you wear many hats — investor, owner, lender, operator, laborer, marketer, financial wizard and broom pusher. Each hat comes with different responsibilities. You will be balancing many conflicting demands on your time.  In the broader market place, each of these roles commands a different wage rate. And in a mature company, each would have a different individual performing the role. But in a startup you may perform all of them. In the beginning, everything that you do to build the business is priceless and contributes to the company. Some of it is your time; some of it is your talent; and some of it may be your fortune (savings). These are the elements you need to consider when pricing your contribution. Your contributions will increase the company’s value. This, in turn, will increase the value of your share of the company.

What can the company afford to pay?
The value of the company is measured in terms of equity, or ownership rights to the profits and responsibility for the losses. All startups depend upon an initial equity investment of time, resources and money in order to get started for which it exchanges a share of the ownership. For start-ups cash is king! And only sales create cash. A start-up company can survive only as long as its cash (available funds) and sales can cover the cost of its expenses. A company can only afford to spend cash if that expenditure will be replaced by sales revenue.

What does the market tell you about your worth?
There are only three sources of funds for the company to use to pay you

1. Equity (investors’ savings and profits retained in the company),
2. Sales (net profit from sales of goods/services to customers)
3. Debt (borrowings from you and other creditors)

Of these only Sale produces New Money. Equity and Debt redistribute existing funds borrowed from the past earnings of the investors or future earnings of the company. These are the elements of the company’s business model and should be the elements you consider for your own personal business model.

Planning for your value to a start-up company
The better you plan how you will manage these elements, the better you will be able to determine how to maximize your return from the startup. Questions you should ask yourself are:

1. “As a potential owner how does this business venture fit into my personal life goals?”
2. “Is this business a means to an end, or is it the end itself?”
3. “Will I own the business, or will the business own me?”

Conclusion:
These are daunting questions filled with risks.  As a sole proprietor or a member of a team of investor-entrepreneurs, it is an opportunity to be part of something where you can see a real impact that your skills, experience, talents and efforts can have. It is an opportunity full of potential for personal freedom and satisfaction. And it can be financially rewarding.

How you will want to value yourself depends on your personal business model.  I am going to discuss how you answers to these questions in Part 2.