How To Start And Grow A Tech Company

Mint CEO, Aaron Patzer, gave a presentation on building startups from the ground up.

He started Mint with an idea about handling personal finances more efficiently. He turned the idea into a company and built it from the ground up and sold it for $170 million in less than three years.

This video is one of the most revelatory resources I have come across in terms of providing real-world finance and start up details.

Following are some notes from the video.

Three Phases of Startup Business Growth

  • Phase 1: Garage (<$100K)
  • Phase 2: Seed (<$1m)
  • Phase 3: Funded (>$1m)

Phase 1: Garage Goal

  • Main goal is to build a prototype
  • Question: How do venture capitalists and angel investors determine the value of a company that has no product and no revenue?
  • Answer: Pre-revenue valuation:
    • +$500K/engineer (prototype development)
    • -$250k/business guy (idea, market research, biz plan)

Phase 1: Garage Expenses

  • Founders: living expenses $30k/yr
  • Engineering First Hires: low salary, high equity (1-5%) $30-50K year
  • Office: by the cube, $400 /cube/month
  • Tech: laptops, couple of servers, development software, $10K
  • Legal: Corporate setup, deferred payment for 0.50 – 0.75% of company
  • TOTAL with 2 founders + 1 engineer/contractor = $150k / year burn (Assumes 1 technical + 1 business founder)
  • Need to raise seed money within 9 months

Phase 2: Seed Goal

  • Main goal is an alpha launch of the prototype
  • The product needs to be usable, but not a polished or scalable product
  • Headcount: 5-6
  • 3-4 engineers
    • 1 product developer / frontend specialist
    • 1 business generalist to do everything: fund raising, sales, marketing, recruiting, etc.

Phase 2: Seed Expenses

  • Salaries: Equity decreases, salaries rise, but below market, $50-90k per yr, total $450K/yr
  • Overhead: Facilities + benefits + taxes + food + laptops, +20%, total $100k/yr
  • Legal: VCs will make you pay for the financing, $25k incorporation, $2k/mo general, total $50k
  • Total burn for 5-6 person team = $600k / yr
  • Need to raise series A funding within 12 month

Phase 2: Seed Revenue Projections

  • Your absolute revenue projections will be worthless.
  • However, projections based on what you will make per product, per user or per transaction is best. If there’s a big market, investors can figure out realistic earnings.
  • Walk investors through your revenue projections very linearly. Go from website, into revenue stream, scaling, etc.

Phase 3: Funded Goal

  • Goal: Launch a real product and grow a profitable business

Phase 3: Funded Expenses

  • Salaries and Overhead: Salaries at market + taxes + facilities – $200k /yr
  • COG’s: Customer service, SMS, bandwidth, servers to scale – widely varying
  • Legal: contracts, patents, employment scale up with headcount – $10-50k / month
  • Total burn with 30 person team = $6.0m / yr
  • “Hidden” expenses:
    • Legal: patents, trademarks, contracts, financing, employment, immigration
    • Consultants: SEO, SEM, design, logos, DB tuning, etc.
  • Need to be profitable with 2 years

See the whole post on TechCrunch: Startups 101: The Complete Mint Presentation.

How To Produce a TV Talk Show, in 2 Minutes

Sept 19, 2009: This month we worked with students to show how to produce a 3-camera television talk show in Ventura, CA. This video highlights the integration of the studio, camera equipment, lights, audio equipment, control room, and of course the Director, student crew and on-camera talent necessary to making it all happen.

In addition to opportunities associated with having the shows broadcast locally as a cable TV program, another advantage is posting video productions onto internet channels for broader viewership, which also allows them to be viewed indefinitely into the future, providing greater exposure for the same production.

Social Media Chocolate Strategy

This week I had the occasion to speak with two friends about Internet marketing and social media. In each case, these ladies were somewhat daunted by all the various opportunities available for communication, connections and/or promotion and were seeking advice on what to do.

My feedback was simple: Eat more chocolate and spend less time on the computer. Well, not really. Arguably, too much of either one can be bad for your health, but if you eat very dark organic chocolate, while simultaneously spending only productive time on the computer, I personally think the health factors turn positive. (Note: I’m not a Doctor and not authorized to give dietary advice, so if you doubt the veracity of such wisdom, please send your chocolate to me).

Health food aside, when assuming the perspective of someone who is “not” availing themselves of a variety of Internet communication channels, I’m sure you can appreciate that such folks could very well be put off by all that can be explored and learned.

So…my real advice is twofold:

1) The Un-Social Media Strategy

This would be somewhat akin to opening a box of chocolates and randomly selecting one, and when ready, randomly picking another to taste.

Stated another way, simply start anywhere with any social media channel that catches your fancy and not concern yourself with any strategy at all – other than to learn and have fun.

You can do one or any of the following:

♦ Establish a profile on Facebook and connect with friends.

♦ Set yourself up on LinkedIn and engage in some business networking.

♦ Find some blogs on topics of interest and post some comments.

♦ Create an account at Instagram and upload some photos.

Or, take advantage of any of the thousands of other social media opportunities in the world that you encounter.

2) Strategic Social Media Marketing

This would be comparable to opening a box of chocolates and planning a campaign to maximize the enjoyment of all those delectables as efficiently as possible.

From a strategic perspective, all those chocolates are NOT equal. And the worst thing to do would be to eat them all at once in an orgy of online gluttony.

So, where to start?

If you are not averse to writing regularly about a topic of interest, then the first online social media chocolate is easy to select:

A) BLOGGING: Start with a blog. No matter how you evolve into the realm of social media, if you really want to strategically leverage your online interactions, then it will all revolve around your blog(s). Hence, establishing a blog is the most important element of all that will follow. Your blog will be the very foundation of every single social channel that you engage. You see, your blog is all yours: you control it and own it (particularly if you have a self-hosted blog). All other social media channels are controlled by the company that is providing the service. It’s like you are a visitor in their home. However, a blog is like your very own home. Again, this needs to be considered from the perspective of a strategic use of online marketing, as opposed to simply enjoying the box of chocolates.

B) LINKEDIN: Presuming your strategic interest is in marketing some product, or especially service (even if it’s simply your services related to personal employment), then you will want to establish a profile on LinkedIn. The purpose of this site is to allow registered users to maintain a list of contact details of people they know and trust in business. If you have your own business, you can create a company page as well. LinkedIn should be connected to your blog and your regular blog writings (posts) can, and should be, auto-imported into your LinkedIn profile to further leverage your blog activities. LinkedIn is a worthy chocolate to consume for professional networking.

C) FACEBOOK: You’ll definitely want to establish a profile on Facebook no matter what you’re doing. Of all the social media channels on our little interconnected ball of rock, water, people and computers, Facebook is the big daddy. It’s the largest social networking service in the world. Similar to LinkedIn, Facebook also offers Business Pages, and also has viewership metrics (via the Insights data available to Business Page administrators). Facebook is a rich network, and includes the ability to email and instant message friends, as well as upload photos and keep apprised of what’s going on with your friends and family who also use the service. Further, you can conduct your Internet searches directly from within the service. Facebook is like its own self-contained Internet, or its very own large box of chocolates. But you are a guest. You should definitely promote your blog on Facebook and auto-import your blog posts into your Facebook profile and/or Facebook business Page. Facebook is one of the best tasting chocolates in the box and for the non-strategic participant could be the one and only chocolate to partake.

Strategic Social Media Extra Credit

D) YOUTUBE: If you like movies (or at least have an interest in making simple ones with a video camera), then YouTube is an especially tasty truffle. You already know YouTube is a video sharing website and if you already have videos uploaded there, they should also be embedded within your blog and leveraged via your other social media channels. Video is a Google darling (Google purchased YouTube in November of 2006), and is an important component of any online marketing mix. The only reason it’s listed as “extra credit” instead of within the first list of chocolates is because although the technical skills to publish videos are nominal, it is arguably a bit more than the others.

E) TWITTER: Twitter may be the hot online social media application right now, but that’s not enough of a marketing reason to use it. However, your customers may very well be using Twitter to talk about you today. So, hot or not, Twitter is worth listening to. You’ll be fairly amazed at what you find and at how easy it is to keep abreast of conversations that matter to you.

There are plenty more chocolates in that delectable box of social media channels. Strategically speaking, the main point to recognize is that all you do in social marketing should revolve around a blog, if you are inclined to leverage your impact for marketing purposes. But if the notion of a strategic approach to social media participation seems to lessen the appeal of trying all those chocolates, then “The Un-Social Media Strategy” is right for you. Enjoy!

What is RSS?

RSS is an abbreviation for Really Simple Syndication (also, Rich Site Summary). So what the heck is that? Well, for the first term, the initial two words are likely simple to grasp.

However, some folks might benefit from a little clarification about “Syndication.”

The word syndication comes from “syndicate,” which has a number of meanings. We’re not so concerned about the definition used as “A loose affiliation of gangsters.” Two other concepts that would be more beneficial for our use are as follows (from the American Heritage Dictionary):

  • An agency that sells articles, features, or photographs for publication in a number of newspapers or periodicals simultaneously.
  • A chain of newspapers, or an agency that distributes features to multiple newspapers.

If you recall back in the old days when people read newspapers, you might have enjoyed a favorite comic strip. Well, that comic strip was created by an artist and distributed, or “syndicated,” to all the newspapers that wanted to publish that strip.

So, RSS is a modern electronic equivalent of making words, pictures, videos, music, audio broadcasts, etc. (content), available electronically to interested recipients around the world. RSS is most notably associated with blogs.

And the “really simple” part is that when you publish content on a blog, you don’t have to do anything except publish your stuff and it’s instantly distributed (syndicated) for free and available to others who use RSS readers. (Which are also free).

The cool thing for the people reading your stuff is they don’t even need to visit your website. So, they can read all the latest info from their favorite blogs without even visiting your site by installing a free reader or news aggregator.

However, implied in the term “Rich Site Summary” is the notion that the distributed RSS content may only be summary of the primary content, meaning readers would have to click through to the source (your blog) to read the whole article.

Regardless, the idea is sort of like how you could read your favorite comic in your local newspaper without having to visit the artist’s studio who created it. (Perhaps a newspaper is not a valid example anymore. How many people read them?)

What is a Blog?

A blog is a type of website.

The word “blog” is a contraction of “weblog.”

Of course “Web” refers to the “World Wide Web” (www), which is a very large set of interlinked documents accessed via the Internet.

A “log” is a regularly updated record of activities or events, such as ship’s log.

So, a blog is a website with regularly updated articles, photos, videos, audio recordings, etc.

The word “blog” can also be used as a verb, meaning to maintain or add content to a blog. (Example: I blogged about the word “blog” today.)

QUESTION: Since you can also routinely update a regular website with articles, photos, videos, etc., what makes a blog so special?

ANSWER: Three things.

  • A blog is very easy to update with new articles or “posts.” Easier than a regular website. By its very nature, a blog is intended to facilitate a flow of updated material, while a regular website could remain static indefinitely, or perhaps might be updated only now and then.
  • A blog has a built-in system that allows visitors to easily add their own “comments,” which may be agreements, disagreements, or thoughts right after your posts. (Although you can control and limit this functionality). In this way, blogs facilitate two-way communication and even community building between individuals with mutual interests. Having said that, many websites, including this one, have disabled the commenting feature because of the proliferation of comment spam by robots and low-paid overseas workers that are a nuisance to manage. Oh well!
  • Blogs also have a built-in system (RSS) that automatically notifies search engines and other computers when new material is added. In this way, Internet users around the world have the potential to instantly be aware of, and view, your new material – without even visiting your blog (your words automatically show up on their computer). This third part, in particular, is a powerful way to leverage your views, knowledge and expertise via technology. Of course, this potential is really the most meaningful only after people decide to follow your content.

Blogs are be used by businesses, large and small, to facilitate frequent communication with customers and potential customers.

Blogs are used by artists and writers who wish to develop new material online, and/or are desiring visitor feedback or participation.

Blogs are used by anyone desiring to promote their services, their products or themselves.

In each of these examples, blogs can generate MORE visitors than regular websites, especially when used effectively as part of an search engine optimization strategy.

Furthermore, in each of these examples blogs are more effective at establishing increased INTERACTION with visitors, compared to regular websites. Blogs are an integral component of the internet’s social media interactions.

What is the Difference Between the Internet and the World Wide Web?

network

In every-day language, many folks regularly use the terms Internet and World Wide Web (Web) as synonyms.

However, the terms are not identical.

The Internet is a global data communications system. It is a hardware and software infrastructure that provides connectivity between computers.

In contrast, the Web is one of the services communicated via the Internet. It is a collection of interconnected documents, photos, videos and other resources, that can be accessed with a click of your mouse.

One could loosely liken the Internet to the global system of physical roadways, and liken the Web to all the cars, trucks, buses and motorcycles that comprise them (individual websites). If you could also imagine that all the vehicles are not only connected by pavement, but also by cell phones, and that you had potential access to every phone number of every vehicle in the world, the analogy would become more accurate.