Advice

Bootstrapping Your Startup

I believe that startup founders who are ingenious in coming up with alternative ideas to finance their startups will always be better slated for success. Check out how the founders of AirBnB funded their startup before they were accepted into YCombinator in the video here. In fact their ingenious way of sourcing money was one of the main reason they were accepted into YCombinator. The guys behind AirBnB basically designed cool limited edition Obama-Os and Captain McCain cereals to be sold to the public. They made 500 of these and the cereals played really well during the 2008 US Presidential elections.

Or what about another startup, Holstee who made a really meaningful mission statement and having that mission statement go viral and selling thousands of posters generating useful cash for the core business.

And of course there’s 37signals who publish a book from lessons learnt from their startup!

There is no limit to how one can potentially generate cash from the business’s many assets. Be creative in coming out with ideas to bootstrap your startup and extend the runway!

aside 13 Jan

Meeting Eric Ries

Eric Ries is in London! If you don’t know who he is, he is the author of The Lean Startup book. Read my previous post on why there’s so much hype about this guy and why I subscribe really strongly to his principles in building up a company. This is the #1 must-read book for all entrepreneur.

Anyway it was great listening to him giving a talk at LSE yesterday although most of the things that he talked about (~85%) are material from his book. Managed to asked him the last question during Q&A and snatched another quick question when he was signing my book.

Here’s my question and Eric’s answers (not verbatim but rephrased to the best way that I understood his answers):

Q: What happens when you create an MVP and launch it but nobody uses your product. Do you blame the marketing division responsible because there is not enough traffic?

A: In startup, there is no such thing as a marketing division. Everyone is involved in marketing the product. Thinking of marketing as a separate division is an old management way of thinking about business. The idea is to position the product properly. Eric basically talked about customer acquisition method. He went on to describe how as CTO of IMVU he was also VP Marketing and had a daily marketing budget of US$5.00 to spend on Google AdWords and he had to try different keywords to get traffic to the site and get people to use his company’s product (which is basically an instant messaging software with 3D avatars). This story is well documented in his book.

Q: How do we apply The Lean Startup method in multi-sided markets businesses.

A: Focus on a niche where there is a ready small subset of ready buyers and sellers. For example, Facebook started out focusing only on Harvard students and slowly branched out to other universities. The same is eBay in auctions. Test out the MVP (Minimum Viable Product) using this method for this multi-sided markets business.

***

Eric stressed many times in his talk that at this day and age, we have all the technology that we want to produce almost any web app that is conceivable. The constraint is the idea. Heck, we can build a social network for dogs if we want to. The question that entrepreneurs should ask at the beginning is…

not whether a product can be built, but whether it should be build.

aside 11 Jan

Facebook as a Business Productivity Tool

Is Facebook helping productivity or a distraction towards work? Some companies think it is a distraction and has banned the social media site from office networks. I believe this is the wrong approach especially in dealing with the new generation of young employees. There is an increasingly blurred-line between work and leisure and companies that try to separate the two are doing themselves a disfavour by not leveraging on the power of social media.

I am big advocate of Facebook as a productivity tool. Our current startup at ChallegeJam uses Facebook extensively in communicating with team members and segregating information especially since we are all students with different schedules and do not have an office space to work together any single day. We use the messaging tool to have individual discussions on issues and make very strong use of the group to have discussions among the 6 members of the team (or the separate functional team – Marketing and Development)

Above is a screenshot of the Facebook group which I use with my society members in SIFE UCL. We are a social entrepreneurship society and our project this year is to help a charity – Heritage Without Border (HWB) develop a revenue stream. We made great use of the Document feature in the group and has created to date 14 documents on various proposals for HWB. Each document can be edited by other members and discussions are ongoing on the content.

No doubt the document feature is very limited and is only good for typing out words and is not full-featured like Google Docs but it really helps collaboration since each member receives a notification on Facebook and can easily check the updates anytime. This beats any other productivity tool because young people spend so much time on Facebook, much more than on email and are more comfortable with Facebook usage.

On our ChallengeJam groups, we use it to share links, updates on progress, images of logos and screenshots of designs. It is definitely a way that work for us as a startup. If you are a student reading this you may want to try it out on your society committee members or with your startup founders.

aside 5 Jan

E-Myth

E-Myth refers to the Entrepreneurial Myth, a book written by Michael Gerber. This is a book which I read about 3 years ago after completing A-Levels while interning in an online advertising startup. The basic idea that Michael Gerber explored is the fact that most small businesses fail (~99%) and it is because there is a lack of system in place to ensure success.

The reason why most businesses fail according to Michael Gerber is because most founders are experts in their subject area and are inspired to start a business without a true entrepreneur’s outlook. Some examples would be a chef who has been working in a restaurant for 15 years and is now inspired to open up a restaurant because he believes he has earned enough experience working for others or a salesman who has been working in the logistics industry for a few years and now wants to start a similar business to compete against his previous employer. They are experts in their subject area but they may lack the other qualities required to bring a business to success.

Michael Gerber says that a business founder at the early stages essentially plays 3 roles at the same time – an entrepreneur, a manager and a technician. Most business founders fail to see the differences and end up playing only one role – the technician because that is the role that they are most confident and comfortable with.

The technician is all about the now and deals with the nitty gritty details of the business like preparing cakes. The manager is about managing the employees that the business have and to train them to be experts in their roles. The entrepreneur is there to think long-term for the business and to prepare and guide the business in the right direction by putting in place measures now to scale the business in the future.

Most business founders spend too much time in the technician role and very little in the entrepreneur role to plan for the future. As a result, business founders always find themselves too busy fighting fire and do not have enough time to plan for the future.

Michael Gerber suggests that business founders create systems with simplified checklists and job descriptions of each role, i.e. a fool-proof method for anyone to do their job perfectly. This is basically putting in place systems like what McDonald’s have for each of its restaurant staff so every staff knows perfectly well what he needs to do perfectly.

Michael Gerber also suggests business founders create an organisation chart with all the roles that a business needs like HR, accounts, legal etc. At the beginning of a business life and minimum employees, the roles will be mainly filled with the business founders. As the business expands, more staff will be hired to fill in the roles and the job can be delegated together with the responsibilities. The new hire will be accountable to fulfil the role based on the description of the job.

This is the basic summary of the E-Myth. Buy the book off Amazon here if you are interested in reading more about it.

aside 2 Jan

Mentors

I think the one most important takeaway lesson that I found extremely useful in my journey as an entrepreneur is the importance of having mentors around you to advice you on your startup business. It is a pretty lonely journey once you have made the decision to go all-in as an entrepreneur. The people that you surround yourself with can help nudge you in the right direction.

I made the decision to go all-in into entrepreneurship after having a conversation with a relief Economics teacher in junior college in Singapore which I somehow still kept in touch with. It was over summer 2011 and I was telling him about my little foray into entrepreneurship by providing storage and shipping services for students and how I somehow did pretty well and chalked up 5 figures in revenue and turned a pretty decent profit for myself.

He saw in me the interest in entrepreneurship and had one advice for me. I am at a cliff and am deciding whether to jump off it but the fear of jumping is holding me back very severely. His advice to me is to simply take the plunge and launch the business as this was the advice he received from a friend several years ago when he was starting out with his fund management company (yes, he manages some investment funds on the side even though he is an A-levels Economics tutor).

Fast forward to the end of summer, I decided to take the plunge and launched SexyFoodie. I surrounded myself with 2 advisors and one of the advisor adviced me to build up a Business Advisory Board and formalise relationship with a letter. I did that and while networking around London, I met 2 other entrepreneurs and managed to got them along to advice me along my entrepreneurial journey.

The important part about choosing mentors is to ideally choose someone who has gone through the experience that you are going to go through. I have received tremendous feedback from my mentors in going through the business ideas, plans and pitches. There are there to give support whenever the business is not going right and to nudge me in the right direction. Start finding your mentor from the list of people you know and as you go along meeting other people, you will meet other people who may be a better fit in providing you with advice. This is one major step forward for me in my journey as an entrepreneur.

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Bootstrapping Your Startup

Meeting Eric Ries

Facebook as a Business Productivity Tool

E-Myth

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