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Andy Sack – hero or madman?

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andy sack seattle

I’ve been in a bit of a blogging funk — my reason is a good one. I’m going on public record that I’m starting a company. There. I said it!

As part of that process, I got sidetracked reading local Seattle entrepreneur Andy Sack’s blog — he’s the driving force behind community review site turned local deal and coupon site Judy’s Book.

What I found so compelling is that he opened up and shared the good and the bad from the Judy’s Book trials and tribulations. Along the way they found some things going well (and vice versa) and they decided to change course — it makes for incredibly interesting reading.

To save you some time, here are my favorite posts from August 2006 thru May 2007:

Exhibitor Booths – Startup thoughts from Web 2.0 Expo

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I really enjoyed the Web 2.0 Expo in San Francisco earlier this week. Here are some messages that stuck with me from the 4 days of talks.

While walking around the expo (exhibitor booths), I was struck by how few of them bothered to make it easy for attendees to quickly get a sense for what problem they solved. Many not only didn’t display their name, but they had no 5 word description of their value-add! Also, the popular companies were easy to find, because of the crowds around their booths (reminded me of P.T. Barnum’s quote “nothing attracts a crowd like a crowd”).

This led to a few ideas for exhibitors:

  • If you aren’t a well-known brand, make sure you have a 5-word explanation for your company easily visible at your booth
  • It’s a little smarmy, but consider ‘hiring a small crowd’ to hang around you/your booth, to attract other visitors. As the crowd builds, they can wander off a bit, and then come back. This allows the actual visitors to get to your representatives.
  • Obviously, have an easy handout for people — a single half-sheet card that quickly lays out benefits, with URL to get freebie

It’s Not About the Startup Idea

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I just read a great post by Paul Graham of YCombinator fame (he probably did something else, too 🙂 ). It talks about the fact that it isn’t about the ‘quality’ of the startup idea. Instead, the “main value of your initial idea is that, in the process of discovering it’s broken, you’ll come up with your real idea.”

He then recommended that instead of saying what your idea IS, you should instead pose it as a question, “could we accomplish this idea/goal?”. That changes the way you think about it, and instead of proving your idea wrong, it allows you to expand your thinking.

Go find an intolerable problem and nurture the feeling that “it must be possible to solve it” and question how you would do so — Paul posits that “simple as it seems, that’s the recipe for a lot of startup ideas.”

I’m really enjoying Paul’s essays.

You Can’t Pay Someone to Care

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I’m not sure if this is an original thought or not, but I didn’t want to do a Google search to find out that I am again, unoriginal. I was thinking today about the fact that “You Can’t Pay Someone to Care”.

You can pay a person to do a job, and you can reward them for doing a great job. You can pay someone to work overtime, and to work on weekends. You can even pay them to do something they hate.

But, you can’t pay them to care. They either care, or they don’t. And if they don’t care, you’re screwed, because they’re going to create so many hidden problems for you that you’re kidding yourself by keeping them around.

Do them a favor. Do the other employees a favor. And, most important, do yourself a favor.

Amputate them from your organization. Remove them from your life. Fast.

Oh yes… and if you don’t care about what you’re doing… change it!

Startup founders may not be as wealthy as previously thought…

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I attended a breakfast meeting today for the Northwest Entrepreneur Network today — the theme was Anatomy of a Venture Financing — overall, it was a good event. One thing that surprised me was how little ownership founders generally maintain after several rounds of financing.  Per their presentation, in a very successful scenario, the founders end up with <8% of the company!

Here are some of my bullet point takeaways from the morning:

  • Tie up IP early, when when/if you are still at your previous employer
  • Document every penny you spend, to help justify your investment/ownership later
  • Need succinct business proposition early on
  • Define market potential for your business
  • Define minimum investment to get to exit
  • Founders must have skin in the game ($) beyond lost wages
  • Is company a feature, or a business?
  • Realistic Cap Table, & right founder %’s (50/50 usually doesn’t make sense)
  • Resolve all shareholder agreements before looking for any $
  • Valuation = 12 month forward revenue
  • Due Diligence = auditing the business plan (what will you do, how soon, multiples)
  • VC’s prefer Corp’s to LLC’s (because existing law on the books) – LLC & S-Corp pass on income & VC’s can’t have income
  • 25 Page biz plan & powerpoint suffice (avoid tirekickers of your plans)
  • Board members (a) must open doors and (b) act as mentor for CEO
  • Insist on pro-rata investment rights for folks in each financing round