I attended
Marc Hedlund's
Coder to Co-Founder: Entrepreneuring for Geeks at ETech today. An excellent tutorial about what it takes to start a web company. He covered a lot of ground that I can only highlight.
First, what is an entrepreneur? Someone who creates something from nothing. What is that something? The something starts with the idea that won't leave you alone. Even if the idea keeps getting the "that will never fly" response when you tell others don't given up, evolve it into something better (reminded me of how Fred Smith got a low grade on his business-idea for FedEx in college). However, know when to move onto a new one. Your ideas (engineering) will get better the more you know about business, marketing, sales, etc... If you have no education in business get some. You don't need a MBA, just read some books on it or take a short course on business administration. When do you know if you are ready to try? When you are more excited about your idea than afraid to pursue it -- if you not afraid at all you probably shouldn't start.
What is it like to be an entrepreneur? It sounds like a wild ride. It's fun to be your own boss but it can also be very hard; everyday is something new, usually involving things you have never done before. But don't become one to get rich or become famous; you need your heart in the idea, otherwise you will probably give up early. Remember, losing sucks, especially if you lose other peoples money who also believed in your idea.
How do you get started? First, build within what you know and build a prototype (or even a picture) of the interface and give it to people for feedback, it is a great momentum builder. But remember, give people what they need, not what they say they want. Share you ideas, you need feedback to improve it. Get a partner (no more then two) so you can feed off each other; it helps a lot to keep the momentum building. Don't worry about timing, the market fluctuates and you need to just adjust with it. (Now it is hard to afford office space and find good programmers, but relatively easy to get funding.) Don't let competition scare you off, emphasize what you can do better than them. Do worry about whether there will be demand for you product/service. Go out and find people who would be your customers (get non-computer people). How long does it take to explain your idea? Do they become excite? Learn how to explain it to them using common terms. Have a friend deliver your pitch to someone and see how it comes off. Also, imagine how you would compete with yourself, i.e., how would you compete with what you just launched.
What about co-founders? It will change your relationship with the person if you know them, regardless of whether the idea fails or succeeds, so keep that in mind. Having a co-founder is good because you can build momentum off each other; but having more four or more is nuts, the decisions get harder with more. Regardless of the number of co-founders work out a good way to handle disagreements. Also the first three (or two) hires will set the tone for the company, so choose them very wisely. In fact, hire them as contractors first to see if they work out. However try to get contractors who are full time so their attention is undivided. Also, don't ignore good people who can't commit to your company until you have better backing, they just can't afford the risk since they have a family, etc... It is really important to hire people you like, who like you, and who are nearly as passionate about your idea as you are.
If you have never started a company before, you will need bootstrapping funding, i.e., your own or family or friends money. Best way is moonlighting, work on it in the evenings and on weekends. Tough to do but you keep full ownership of the company; you will probably worry a lot about money. Once you having something running you can seek investment from venture capital. The best way to try to get investment is to not need the money to survive, but to grow or to grow faster. Funding is great because you can start paying your employees! The more you get the more strings are attached. Angel funding is from 0.5-1.5 million with you giving up 5-15% of the company. Series A is 1-10 million with you giving up 40-50% of the company and getting a board member. When giving a sales pitch to a VC you need 10-15 slides, a two or three page execute summary, and an introduction. Keep the pitch plainspoken and entertaining. Remember, they invest in companies, not products. Also, VC leave the planet in August and December so don't even try to reach one.
Marc then went into two case studies, gripejuice and wesabe. Gripejuice was to be a social site to log problem transactions customers had with companies. He didn't peruse it for many reasons, one being the effort on the user to was too great. However, a similar site has launched called 321-CALL-LOG. The other is a social finance site called
wesabe that recently launched. The biggest obstacle to overcome for the business model was addressing the privacy concerns the user would have with uploading or financial records with the site. He overcame thus by enabling user to anonymize the data.
His recommended reading list: The Art of the Start, by Kawasaki, Founders at Work, by Livingston, Getting Real by 37signals, The Ten Day MBA by Silbiger, Product Marketing Handbook for Software by Chapman, and What the Numbers Say, by Boyum.
